Western Forest Products

In Cooperation with:

Greenleaf Integrated Energy Systems Inc

With Input From:

The University of British Columbia (UBC)

WDMP Project Report

Opportunity Analysis:

Options for Selected Value-Added Processing of Coastal Forest Debris Resulting From Logging Operations

June 2012 Options for Value-Added Processing of Coastal Forest Debris

Acknowledgement

Western Forest Products Inc gratefully acknowledges funding provided by the Government of British Columbia and delivered through FP Innovations’ Woody Debris Management Program in support of this project

Disclaimer

While every effort has been made to ensure the accuracy and completeness of the information and analyses contained within this document, some technical inaccuracies or typographic errors may exist. Notwithstanding any contractual provisions to the contrary, Greenleaf Integrated Energy Systems Inc. and the University of British Columbia cannot and do not accept responsibility for losses of any kind related to the use of this document.

Any information in this document is subject to change without notice. Any amendments made to this document will be incorporated in new revisions.

2 Options for Value-Added Processing of Coastal Forest Debris Table of Contents

Methodology ...... 6

Executive Summary...... 8

1. Profile of Logging Debris Resource...... 11

2. Analysis of Comminution & Beneficiation Requirements & Options ...... 14 2.1 Field Grinding ...... 14 2.2 Debris Trucking...... 18 2.3 Sensitivity Analysis...... 18 3. Analysis of Selected Value-Added Technology Pathways...... 20 3.1 Sector Profile: Torrefaction...... 20 3.1.1 Introduction...... 20 3.1.2 Cell Structure of Biomass (Lignocellulose)...... 20 3.1.3 Energy Content in Wood ...... 22 3.1.4 Torrefaction ...... 22 3.1.5 Products of Torrefaction...... 23 3.1.6 Mass and Energy Balance...... 24 3.1.7 Torrefied Product Characteristics ...... 25 3.1.8 Impact of Torrefaction on Combusting and Gasification Quality ...... 26 3.1.9 Co-firing quality ...... 26 3.1.10 Existing and Developing Torrefaction & Auxiliary Equipment/Processes ...... 27 3.1.11 Pretreatment Options...... 28 3.1.12 Characteristics of torrefaction reactors...... 30 3.1.13 Torrefaction technology comparison...... 32 3.1.14 Torrefaction cost analysis...... 34 3.1.15 Torrefaction challenges ...... 34 3.1.16 Environmental challenges...... 35 3.1.17 Torrefaction Technology Sources & Characteristics...... 36 3.1.18 Preferred Technologies (BBRG) ...... 37 3.2 Sector Profile: Densification Technologies...... 38 3.2.1 Technology Development History...... 38 3.2.2 Overview of densification...... 38 3.2.3 Drying...... 39 3.2.4 Size Reduction...... 41 3.2.5 Pelleting and Extrusion...... 42 3.2.6 Equipment Configurations & Costs...... 43 3.2.7 Products/Outputs Characteristics...... 44 3.2.8 Densification Equipment Variations...... 46 3.2.9 Effect of Process Variables on Densification Process ...... 49 3.2.10 Challenges in Densification of Biomass...... 49 3.2.11 Technology Sources & Characteristics – Pelleting Systems ...... 50 3.2.12 Non-Conventional Densification Technologies – Developers/Suppliers...... 50 3.2.13 Issues with Densification of Torrefied Feedstock ...... 50 3.2.14 References...... 51

3 Options for Value-Added Processing of Coastal Forest Debris

3.3 Sector Profile: Pyrolysis Technologies ...... 52 3.3.1 Biomass Conversion Processes and Fundamentals...... 52 3.3.2 Pyrolysis ...... 53 3.3.3 Pyrolysis Oil ...... 54 3.3.4 Analysis of Comminution & Beneficiation Requirements & Options ...... 55 3.3.5 Pyrolysis Systems – Alternative Approaches ...... 56 3.3.6 Distillation/Refining of Bio-Oil...... 56 3.3.7 Potential Technology Suppliers...... 58 3.3.8 Budget-Level Capital/Operating Costs...... 63 3.3.9 Distillation/Refining of Bio-Oil...... 66 3.3.10 Compatibility with Existing Engine Technologies...... 71 3.3.12 References...... 72 4. Analysis of Potential Product/Output Markets...... 73 4.1 Market Drivers – Regulations & Incentives...... 73 4.1.1 Regional Market – British Columbia...... 73 4.1.2 Export Markets – Europe...... 80 4.1.3 Export Markets - Asia...... 84 4.2 Market Segments & Related Pricing – Densified Biomass...... 86 4.2.1 BC & Canadian Pellet Industry ...... 86 4.2.2 US Pellet Industry...... 87 4.2.3 Regional Markets - BC ...... 89 4.2.4 Export Markets ...... 93 4.3 Market Segments & Related Pricing – Pyrolysis Bio-Oil ...... 95 4.3.1 Potential Fuel Markets & Applications ...... 95 4.3.2 Potential Bio-Oil Product Pricing – Coastal BC...... 96 5. Profiling of Potential Pathway Opportunities...... 101 5.1 Opportunity Profiling – Torrefaction & Densification Systems ...... 101 5.2 Opportunity Profiling – Pyrolysis Bio-Oil Systems...... 102 6. Environmental Impact Analysis ...... 103 6.1 Base Case Analysis ...... 103 6.2 Incremental Value-Added Processing Analysis ...... 103 6.3 Environmental Profile of Potential Products...... 105 7. Government Funding & Incentive Programs...... 106 7.1 Innovative Funding Programs...... 109 8. Summary, Conclusions & Recommendations ...... 113 8.1 Summary ...... 113 8.1.1 WFP Biomass Resources...... 113 8.1.2 Sector Profiles – Torrefaction, Densification and Pyrolysis...... 113 8.1.3 Market Analysis...... 114 8.1.4 Pathway Opportunities...... 114 8.1.5 Environmental Impact ...... 114

4 Options for Value-Added Processing of Coastal Forest Debris

8.1.6 Government Funding and Incentive Programs ...... 115 8.2 Conclusions ...... 115 8.2.1 Strategic Conclusions ...... 119 Appendix 1 – References...... 121

5 Options for Value-Added Processing of Coastal Forest Debris Methodology

The following report is the result of cooperative inputs provided by Western Forest Products (WFP), Greenleaf Integrated Energy Systems Inc (Greenleaf) and the University of British Columbia’s Biomass and Bioenergy Research Group (BBRG) and Department of Chemical and Biological Engineering (CHBE). WFP provided confidential data regarding relevant biomass resources and related costs/logistics, UBC’s BBRG and CHBE provided overviews of the technologies examined and selected economic models for valued-added processing using these technologies. Greenleaf developed the report outline, biomass cost analysis, market and economic analyses, environmental analysis, summary, conclusions and recommendations sections, and edited the various inputs into a final project report. In this version of the report, which is authorized for public release, information that is confidential to WFP and to participating technology developers has been removed.

The report encompasses eight major sections, as follows:

1. Profile of Logging Debris Resource

For each of the eight business units operated by Western Forest Products that are accessible by road the volume of logging debris available within ~15 m of roadways was estimated using pile counts and volume data prepared by WFP managers following methodology developed by the US Forest Service. For this publically released version of the report, details of harvesting activities and logistics by business unit were removed.

2. Analysis of Comminution & Beneficiation Requirements & Options

The estimated cost for field grinding followed the methods developed by FPInnovations. The cost for trucking field ground debris to existing Dry Land Sorts relied on distances and truck speeds provided by WFP, combined with input from experienced operators. The result was a set of estimated costs for field ground debris delivered to DLS sites where further upgrading by torrefaction or pyrolysis could take place. For this publically released version of the report, details of delivered and processed biomass costs by business unit were removed

3. Analysis of Selected Value-Added Technology Pathways

A sector profile describing torrefaction and densification technologies, developers, approaches, characteristics and generic economics was developed by the BBRG under the supervision of Dr. Shahab Sokhansanj. A similar profile describing the pyrolysis/bio-oil sector was developed by researchers at the CHBE under the supervision of Dr. Kevin Smith.

4. Analysis of Potential Product/Output Markets

Markets for torrefied/densified products and pyrolysis/bio-oil outputs derived from sustainable biomass are driven largely by clean energy regulatory requirements and regional incentives. In the first part of this section, Greenleaf provided an overview of market drivers for regional markets (British Columbia) and for export markets in Europe and Asia. In the second part, Greenleaf estimated competitive prices per tonne for torrefied/densified products for regional displacement of coal and natural gas and for export to Europe. Prices per litre of pyrolysis bio-oil were also estimated for regional displacement of both heavy and refined petroleum products. Competitive price-points were calculated to provide energy-equivalent costs to potential end users, with additional incentives where appropriate.

6 Options for Value-Added Processing of Coastal Forest Debris

5. Profiling of Potential Pathway Opportunities In this section, the economics of the targeted technologies and related product/market pathways were estimated. For torrefied/densified product pathways, a cost-based economic processing spreadsheet model was developed by Dr. Sokhansanj of the BBRG. Greenleaf modified this spreadsheet as required to accommodate various standard and torrefied pelleting/briquetting options, to incorporate relevant input costs based upon WFP inputs, and to apply competitive prices for product/market options as developed in Section 4. For pyrolysis/bio-oil product pathways, Greenleaf utilized a proprietary spreadsheet model developed by Tolero Energy LLC for semi-refined pyrolysis bio-oil processing and received input from CHBE researchers who had access to proprietary modeling tools capable of projecting economics for conventional pyrolysis/bio-oil processing systems. WFP biomass costs and competitive pricing were loaded into both models to provide economic projections for the selected pyrolysis product/market pathways. Outcomes were calculated on a pre-tax basis in terms of Simple Payback, Internal Rate of Return (IRR) and Net Present Value (NPV). Sensitivity analyses were undertaken for both torrefied/densified and pyrolysis/bio-oil pathways based upon changing key variables and assumptions. In the confidential report to WFP, detailed economic projections for all technology pathways and related product/market scenarios are outlined. For this public version of the report, these detailed analyses were extracted due to confidentiality restrictions.

6. Environmental Impact Analysis Based on the quantities of accessible logging debris developed earlier and following a methodology developed by the US Forest Service, the quantities of GHG and CAC emissions from burning slash piles were developed for each business unit as a benchmark of current practice. Using fuel emission factors published by the B.C. Government, the incremental GHG emissions for the field grinding and trucking components were developed for each business unit consistent with existing IPCC protocols. Combined with estimates developed for the pyrolysis and torrefaction processes, the result was a set of incremental emissions that were then compared to coal for torrefaction and to diesel fuel for pyrolysis. For this publically released version of the report, details of potential net emissions impacts by business unit were removed

7. Government Funding & Incentive Programs In this section, Greenleaf outlined a wide range of federal and provincial government programs that may potentially provide funding support for the early adoption of innovative technologies such as torrefaction/densification and pyrolysis bio-oil. This profile was developed by Greenleaf using information compiled in previous studies, updated through web research and personal contacts.

8. Summary, Conclusions & Recommendations In the Summary section, Greenleaf condensed the core information provided in the preceeding report sections. In the Conclusions section, Greenleaf assessed the potential risks associated with each of the technology/product pathways examined. This was done by subjectively assigning a weighted risk factor to each pathway for risks related to: technical performance; logistics; markets/drivers; environmental issues; and other strategic issues. Each pathway was assigned a weighted average risk value. This was then combined with the economic returns calculated for each pathway to develop a graphical representation of the comparative risk/return positioning for each alternative. From this positioning, and from the core analyses undertaken in the report, key strategic conclusions and recommendations were developed. For this publically released version of the report, recommendations developed for WFP were removed

7 Options for Value-Added Processing of Coastal Forest Debris

Executive Summary

Recent advances in biomass processing technologies, stimulated by rising conventional energy prices and climate change concerns, are creating significant opportunities for forest sector stakeholders with access to substantial volumes of wood fibre. The current Opportunity Analysis focuses specifically upon the torrefaction and pyrolysis pathways for conversion of logging debris.

WFP biomass resources under current license holdings are very substantial and broadly dispersed on Vancouver Island. In the eight business units considered for this study, the potential volume of roadside logging debris available from harvesting activities is estimated at over 800,000 Green tonnes/year (Gt/y). At the present time it is WFP practice that all of the available logging debris is raked into piles and burnt.

This study has assumed that roadside logging debris will be ground on site to a <6” product using mobile horizontal grinders. The ground biomass will then be transported to selected Dry Land Sort facilities where it will be screened, dried and processed either by torrefaction into a solid fuel or by pyrolysis into a liquid fuel. The total combined cost of ground biomass delivered to the DLS sites ranges from $31.41/Gt to $48.26/Gt, with a weighted average cost of $34.90/Gt.

A total of sixteen specific torrefaction technologies were reviewed and compared to the extent that information was publically available. At this time, it is not possible to determine a clear technology leader as applied to Coastal BC logging debris since insufficient performance data is available. All torrefaction technologies produce a loose, low density, carbonaceous product. In order to provide cost-efficient delivery to markets it is necessary to bind and compress the material into pellet or briquette form. Accordingly, a total of seven pelleting, two briquetting and one cubing technologies were reviewed for this report. Most are well known and commercial scale cost data is available in generalized form.

A total of six different pyrolysis technologies available from fourteen developers were reviewed and compared to the extent that information was available. Raw pyrolysis oils are corrosive, contain oxygen and water, and are unstable; thereby requiring hydrocarbon refining processes for upgrading into fuels that are compatible with the existing fuel infrastructure and most engines. Several technology developers are working on catalytic upgrading techniques and one is progressing with a solvent extraction approach. Two developers are seeking to integrate a refining process on site, rather than shipping the raw oil to a centralized refinery. At this time it is not possible to determine a clear pyrolysis technology leader as applied to Coastal BC logging debris since insufficient performance data is available.

With one exception, markets for fuels made by torrefaction, densification and pyrolysis are not well developed at this time. The exception is standard wood pellets for which large volume markets have existed for several years, principally in Europe. Although a number of jurisdictions in North America have promoted the use of sustainable fuels, consumers have been slow to switch from conventional hydrocarbon fuels due to price, convenience and availability factors. Although lagging Europe, fuel markets in Asia are moving rapidly toward consuming increasing amounts of biomass. In the regional markets closer to BC, sustainable fuels produced through torrefaction or pyrolysis must compete with existing fuels that are readily available at relatively low cost. For solid fuels from torrefaction potential regional market prices were benchmarked against three conventional fuels: large volume commodity coal; large volume commodity natural gas; and small industrial scale (bundled) natural gas in BC. Export prices were benchmarked

8 Options for Value-Added Processing of Coastal Forest Debris against established pricing for standard wood pellets and energy-equivalent pricing for torrefied pellets in Europe. For liquid fuels derived from pyrolysis, market pricing was estimated using third party market survey data for conventional heating and transportation fuels made from crude oil.

To assess the economic potential of torrefaction and densification from WFP’s perspective, a customized spreadsheet model was developed using specific WFP inputs for biomass costs, utilization rate, labour and energy rates,. Profiles were developed for four potential technology pathways across four potential markets. Results were expressed in terms of simple pre-tax payback, pre-tax Internal Rate of Return (IRR) and pre-tax Net Present Value (NPV). For torrefied pellets, the IRRs/NPVs calculated for export to Europe and for displacement of bundled natural gas are attractive, whereas the results for displacement of coal and for displacement of commodity natural gas are somewhat less attractive. In comparison, production of standard wood pellets produced an attractive IRR/NPV for displacement of bundled natural gas but all other cases produced marginal or negative results. Two briquetting technologies were evaluated, each for torrefied and standard wood feedstocks. With only a slight difference between them, both yielded attractive IRRs/NPVs for displacement of bundled natural gas and for export to Europe with torrefied product, but more modest returns for displacement of coal and for displacement of commodity natural gas. Standard briquetted product results yielded generally marginal or negative returns.

With respect to the projected economics of pyrolysis, two proprietary technology pathways were evaluated; the first using a customized financial model of a 300 tonnes/day (tpd) solvent condensation and extraction variant process and the second using confidential third party modeling of conventional pyrolysis technologies at 50 tpd and 100 tpd. For the solvent process, WFP inputs were combined with capital and operating costs provided by the developer and augmented with added balance of plant data developed by Greenleaf. This analysis resulted in attractive base case economics. For the conventional pyrolysis processes, model runs for the 50 tpd system provided marginally attractive economics. Results for the 100 tpd configurations produced attractive and more robust economics for two of the three technology options examined. Of the two pyrolysis technologies evaluated in this report, the solvent extraction process has the potential to produce a diesel substitution fuel without accessing downstream refining facilities.

Using recognized third party emission factors, the base case incremental emissions from grinding and trucking were estimated by business unit. Necessary preprocessing activities such as screening, drying, etc. are estimated to add ~5.25 kg CO 2e/Gt of biomass processed. Since all of the torrefaction and pyrolysis process developers claim near autothermal processes, their incremental GHG emissions are only in the range of 0.018 kg/Gt for torrefaction to 0.035 kg/Gt for pyrolysis. The resulting combined emission profile for torrefaction by business unit is ~27 – 33 g CO 2e/kg of product, a ~98% reduction from the equivalent 1,770 -2,430 g/kg for coal. Similarly, the combined emission profile for pyrolysis by business unit is ~294 – 360 g CO 2e/litre of fuel, a ~89% reduction from the equivalent 3,007 g CO 2e/litre for off-road diesel.

Each of these technology pathways is significantly different from the others. Comparison of the risks associated with such diverse technologies is essentially a subjective process. In order to compare them as objectively as possible, a matrix was developed in which each technology was evaluated according to five risk categories: Technical; Logistic; Markets & Policy Drivers; Environmental; and Strategic. The risk weighted analysis of the six technology pathways was then plotted against the economic results. Although the outcome of this process is subjective, the relative ranking of the processes conforms to general expectations.

9 Options for Value-Added Processing of Coastal Forest Debris

Standard wood pellets and briquettes are relatively low risk but have low return. The risk-return difference between pelleting and briquetting is relatively small but significant, given the relative lack of market penetration by briquettes at commercial scale. Torrefied pellets and briquettes both have somewhat higher risks and substantially higher economic returns as compared to either standard wood pellets or briquettes. The risk-return difference between the two torrefaction paths is small.

Pyrolysis processes, whether producing raw bio-oil or a diesel substitute, have both higher risk and slightly higher reward as compared to torrefaction processes. The risk-return difference between the two pyrolysis paths is also relatively small.

Direct operating experience with demonstration and/or commercial scale plants for both the torrefaction and pyrolysis processes will be required to quantify and reduce the major risk elements, and to verify the estimated economics.

10 Options for Value-Added Processing of Coastal Forest Debris

1. Profile of Logging Debris Resource

At the time of this study, the Western Forest Products (WFP) Timberlands Division operates eight business units in which seven Dry Land Sorts (DLS) are located. For the purposes of this study the analysis excludes those additional forest operations and DLS sites that are deemed isolated or inaccessible by conventional means. Examples of excluded areas are Nootka Sound, and Mainland Coast locations such as Stafford, Broughton, etc.

WFP also operates several saw mills and one valued-added remanufacturing mill. For the purposes of this study the analysis excludes volumes of wood waste generated at these facilities. In general terms much of this saw mill waste is currently hogged and sold as fuel to third parties under existing contracts.

For the eight business units considered for this study, WFP provided the authors with expected annual harvest levels for the next several years. The estimated annual cut volumes by business unit are considered to be confidential by WFP and the details have been deleted from this report at the request of WFP.

To support this study WFP directed the managers of each of the eight business units to estimate the amount of logging debris remaining after harvest of merchantable timber. To do so, only those volumes of debris were included that were within ~15 m of roadside; that is, debris from logging methods that did not bring whole trees to the roadside for processing was excluded. Since the limits on “roadside” differ slightly based on slope of the block, managers were encouraged to think in terms of the area that a hogging unit and hoe could access for collecting and grinding roadside material. On flat ground where there may have been processors, the roadside will be wider, perhaps one chuck away from road edge, while on steep slopes, machines would sit on the road to collect material thus making the consideration of “roadside” much narrower.

Within the eight business units a total of forty-six individual cut blocks were assessed by WFP managers. For each cut block WFP directed the managers to estimate the amount of accessible roadside debris by using the recognized methods developed by the U.S. Forest Service. Specifically, they were asked to count the number of accessible piles and to choose a representative sample of 6 to 10 “average” sized piles per block for measurement. Then, at these sample piles, 1) identify the shape of the pile and 2) collect appropriate data to calculate gross bulk volume for the pile (i.e. collect height and width at ground line). On steep ground, they were asked to do their best to estimate the average ground line for height determination purposes. Applying the representative data to the total number of accessible piles resulted in an estimate of the Gross Pile Block Volume expressed in m 3 of merchantable wood. Assuming 25% air space and 80 OD kg/m 3 (Oven Dry, FERIC range is 55-110 kg/m 3), the net mass of accessible debris was then estimated for each block and summed by business unit.

The results by business unit are considered to be confidential by WFP. In aggregate the quantity of accessible waste amounts to ~15% of harvest. The annual average aggregate waste expected to be generated in the future was estimated to be >800,000 Green tonnes (Gt), or >400,000 Bone Dry tonnes (BDt) and >8,600,000 gigajoules (Gj) using the conversion factors listed in Table 1.1.

11 Options for Value-Added Processing of Coastal Forest Debris

Table 1.1

Conversion from m 3 to mass 0.8 m 3/wet tonne is Conversion to BDt is 0.5 BDt/wet tonne (i.e. 50% moisture) Conversion to hogged volume 2.0395 m 3 solid wood of 1.0 VU = 200 cu. ft. equivalent/VU (5.66m 3) is Conversion to energy is 21.46 Gj/BDt 20.25 Gj/ODt 10.68 Gj/Gt Conversion to crude oil 6.1 Gj/barrel oil (1.0 bbl = equivalent is 159.0 litres or 42.0 US gal.) Conversion to energy value is $100/bbl oil $16.39/Gj

A small amount of debris is also generated at the DLS sites as raw logs are processed. Some of this DLS debris is landfilled nearby but some is hogged and sold as fuel to third parties.

For the eight business units analyzed in this study the harvested timber by major species during the period December 1, 2010 through November 30, 2011 was assessed. Although the volume of each species harvested will vary by year depending on market conditions and other considerations, the amounts are believed by WFP to be representative, though confidential. In general terms the aggregate cut averages ~40-50% Hemlock, ~15-20% Douglas Fir, ~15-20% Western Red Cedar, ~10-20% Balsam Fir, ~ 0-10% Cypress and ~0-5% Sitka Spruce.

For the convenience of the reader the location of the forest tenures assessed are shown on the map in Figure 1.1.

12 Options for Value-Added Processing of Coastal Fores t Debris

Figure 1.1

13 Options for Value-Added Processing of Coastal Forest Debris

For each of the business units WFP also estimated the average one-way haul distance to the nearest DLS site where biomass could be accumulated. The average haul distances were estimated using GIS modeled fibre supply catchment zones for each business unit. The resulting one way distances by business unit are confidential but range from a low of 9.7 km to a high of 115.2 km.

WFP operations in these business units are year round. For a biomass collection and processing operation WFP assumes that harvested blocks would not sit idle very long after logging and that biomass harvesting would take place soon thereafter in order to take advantage of access and not to delay other tenure obligations such as replanting, road deactivation, etc.

For the purpose of this study WFP also provided the following average haul speeds: loaded truck on gravel – 35 kph; empty truck on gravel – 50 kph; loaded truck on highway – 75 kph and empty truck on highway – 80 kph. Since WFP estimated that highway hauls would be minimal (less than 5% of total) and because every DLS is linked by gravel roads to the cut blocks, only the gravel speeds were used in the remainder of this study.

2. Analysis of Comminution & Beneficiation Requirements & Options

2.1 Field Grinding

For the purposes of this study it was assumed that logging debris accessed at road side would be hogged on site into a 6” minus product using a tracked horizontal grinder of the type used in various places in B.C. for this duty. It is further assumed that the grinder discharges its product directly into waiting trucks for transport off-site; that is, no hogged debris is discharged to the ground and no secondary equipment such as a wheeled loader is required on site to load trucks. The use of a tracked grinder, as opposed to the wheeled variant, is particularly useful in field locations with rough terrain.

One of the objectives of this study is to estimate the cost of comminution and transport of logging debris to processing sites, and then to estimate the cost of upgrading that debris to useful products through pyrolysis or torrefaction. To do this in a way that is readily understood, it is convenient to separate the costs into two major pieces: an Upstream component that accumulates the costs for bush grinding and transport to the DLS sites, and a Downstream component that includes the costs of screening, drying, fine grinding, and pyrolysis/torrefaction.

In order to estimate the cost of bush grinding, the authors have relied on the methodology developed by FPInnovations in a paper by A.J. MacDonald entitled Assessment of Economically Accessible Biomass dated May 2009. This was supplemented by discussions with Mr. Rob Stewart, owner of Stewart Systems based in Powell River and operator of two horizontal grinders, several trucks, excavators and other heavy equipment of the type used for the proposed type of work. It is important to note that while Mr. Stewart has experience in processing coastal logging debris, both on Vancouver Island and in the Powell River area, the productivity factors he provided for this study are general in nature. The authors did not have access to detailed information collected by FPI approximately 2 years ago during a field trial with Stewart for TimberWest at Nanaimo Lakes. That data would be useful to validate and fine-tune the model used herein for greater accuracy.

14 Options for Value-Added Processing of Coastal Forest Debris

The general assumptions and input data used to estimate the cost of bush grinding can be found in Table 2.1. Based on these assumptions and the factors listed, the Base Case calculated cost of bush grinding is estimated to be $28.30/ODt or $16.98/Gt (equivalent to $1.59/Gj or $28.53/VU) including allowance for administration, road access and royalty costs. (Note: as used in this report an ODt or Oven Dry tonne is measured at 10% moisture)

15 Options for Value-Added Processing of Coastal Fores t Debris

Table 2.1

First Approximation of Logging Debris Grinding Costs on Vancouver Island

General assumptions: logging methods place debris within ~15 m of roads [as per WFP] logging debris is comprised of tops, limbs, butts and unmarketable stems logging debris is free at roadside average species mix consists of ~4050% hemlock, 2540% firs, 1520% cedar, 010% cypress and 05% spruce with minor amount of alder, maple and other noncommercial species logging methods randomly mix debris species and size of pieces existing bush grinders and trucks can be used to process and haul debris to Dry Land Sorts for further processing moisture content of raw wood averages 50% (wt.) average densities: green = 296.3 kg/m^3, oven dry = 156.2 kg/m^3, ratio = 1.897 (say 1.90) [as per WFP Chemainus] energy content of green ground wood = 17.9 Gj/VU (equal to 3.16 Gj/m^3 or 10.68 Gj/Green tonne)[as per WFP Chemainus] mobilization/demobilization between business units depends on schedule and can not yet be quantified inblock mobilization/demobilization adds ~$1.50 $6.00/ODt [as per Feric]; assume $2.00/ODt administration of site, road access and provincial royalty add costs; assumed collectively at $4.50/ODt [as per WFP] grinder productivity does not vary by business unit

Comminution and loading: assume debris is ground to <6" with existing grinder assume 10.0 scheduled hours per operating day and 200 operating days per year average productivity = 290 VU/operating day (487 Gt or 244 ODt/day) [as per Stewart] (range is 285 320 VU/day or 479 538 Gt/day) grinder discharges directly into truck excavator is used to feed grinder (i.e combined productivity is limited by the least productive machine) excavator operator remotely controls grinder operation (as per Stewart) assume grinder fuel use at 110 litres/hour and excavator loader at 20 litres/hour (both as per Stewart)

Calculations: 290 VU/day = 486.7 Green tonnes/day or 292.0 Oven Dry tonnes/day or 5,191.0 Gj/day or 591.5 m^3 SWE/day 10.0 hours/day = 48.7 Green tonnes/hr or 29.2 Oven Dry tonnes/hr or 519.1Gj/hr or 59.1m^3 SWE/hr

16 Options for Value-Added Processing of Coastal Forest Debris

The cost of grinding was assumed to be the same for each WFP business unit. An allowance was made for in-block mobilization, but not for inter-block mobilization since this will depend upon factors beyond the scope of this study such as scheduling, seasonality, other contractual commitments, etc. It is worth emphasizing that, as listed in Table 2.2, both the grinding and trucking components are based on 10 hour/day shifts, five days/week and 40 weeks/year for a total of 2,000 hours/year. This basis of ~23% of the theoretical maximum time available is intended to approximate the WFP Timberlands operating practice and to provide sufficient flexibility in biomass processing to accommodate weather delays and other seasonal factors. Other possibilities exist such as a two x 10 hour shift/day grinding and hauling operation like that employed by others in the Interior region. Further analysis of the seasonality question must await additional data from WFP and is beyond the scope of the present study.

Table 2.2

Base Case Comminution and Loading (as per FERIC, modified by Stewart) Item Units Loader Grinder Crew size men 1 0 Shift length hr 10 10 Days per week days 5 5 Weeks per year weeks 40 40 Single shift days per year day/yr 200 200 Scheduled hours per year hr/yr 2,000 2,000 Utilization % 65% 65% Fuel cost $/L $1.00 $1.00 Interest rate % 4.5% 4.5% Insurance rate % 4.0% 4.0% Wage rate (base) $/hr $25.00 $25.00 Wage rate including benefits $/hr $30.00 $30.00 Total purchase price CA$ $380,000 $750,000 Expected life hr 14,000 10,000 Expected life yr 7.0 5.0 Scrap value % 10% 10% Wages & benefits $/hr $30.00 $30.00 Fuel consumption L/PMH 20 110 Lube & oil as % of fuel % 15% 9% Fuel & lube cost $/SMH $23.00 $119.90 Repairs, maintenance & supplies $/SMH $19.54 $67.50

Owning cost $/SMH $26.55 $73.36 Operating cost $/SMH $72.54 $187.40 Owning & operating cost $/SMH $99.09 $260.76

Combined loading and grinding $/SMH $359.85 Profit & risk allowance % 15% 15% Allfound cost $/SMH $113.96 $299.87 Combined allfound cost $/PMH $636.66 Productivity ODt/PMH29.2 or 48.7 Gt/PMH Cost $/ODt $21.80 Inblock mobilization $/ODt $2.00 Total grinding cost $/ODt$23.80 or $14.28 per Gt

Confidential 17 Options for Value-Added Processing of Coastal Forest Debris

2.2 Debris Trucking

The one-way haul distances and speeds provided by WFP were used to calculate the haul times and number of loads for each business unit. For the Base Case a truck size of 14.0 VU or 23.5 Gt/load was assumed. This is the combined load capacity of the roll-off and pup units used by Stewart and represents an intermediate size in the range of such equipment used in BC. As such, there is some potential to lower the estimated trucking costs if larger equipment can negotiate the logging terrain on Vancouver Island (e.g. the 30 VU/load “B” train chip vans used in the Interior).

The resulting estimated debris trucking costs range from a low of $24.05/ODt ($14.43/Gt) to a high of $52.13/ODt ($31.28/Gt). The summation of the estimated grinding and trucking costs provides a first approximation of the total Upstream Costs; that is, the cost to grind and haul debris to each of the selected DLS sites. The weighted average for this combined estimate is $34.90/Gt ($58.16/ODt) on a range from a low of $31.41/Gt ($52.35/ODt) to a high of $48.26/Gt ($80.43/ODt). The costs were developed on both a $/ODt and a $/Gt basis for three situations: • logging debris only • DLS generated debris only, and • combined logging debris and DLS debris.

The effect of adding-in the DLS generated debris is to slightly lower the total costs since the DLS material does not require trucking and since it is assumed that no administration, road access or royalty are payable on it.

2.3 Sensitivity Analysis

The preceding estimates for upstream costs and emissions have necessarily been based on a number of assumptions. Until such time as higher quality field data based on actual operating performance of grinders and trucks is available, the only way to assess the accuracy of the results is to subject the model to changes in selected key variables and observe the magnitude and direction of the change in results.

For the purpose of this study a total of six one-off sensitivities were calculated with a general magnitude of ±15% to the Base Case. Since the DLS generated waste is small in quantity and is already accounted for by landfilling or sold as hog fuel, the sensitivity analyses were calculated only for the portion of the logging debris generated in the woods.

Specifically, the following sensitivity cases were calculated: • Grinder utilization at either 50% or 80%, • Grinder fuel use at either 110.5 litres/hour or 149.5 litres/hour, • Trucking cost at either $106.25/hour or $143.75/hour, • Trucking speeds at either 29.8 kph loaded/42.5 kph empty or 40.3 kph loaded/57.5 kph empty, • Truck size at either 18.5 Gt/load or 33.6 Gt/load, and • One way haul distance at either ± 10 km.

No nested sensitivities were calculated for this study.

The impact of reducing grinder utilization to 50% increases the cost by $6.54/ODt, has no effect on net emissions impact and increases the total number of required grinders by 4.2 units. Conversely, increasing

18 Options for Value-Added Processing of Coastal Forest Debris the grinder utilization to 80% decreases the cost by $4.09/ODt, has no effect on net emissions impact and decreases the total number of required grinders by 2.6 units.

The impact of reducing fuel consumption to 110.5 litres/hour decreases the cost by $1.30/ODt, improves the net emissions impact by 1,070 tonnes/year eCO 2 and has no effect on the number of grinders required. Conversely, increasing the fuel consumption to 149.5 litres/hour increases the cost by $1.30/ODt, lessens the net emissions impact by 1,070 tonnes/year eCO 2 and has no effect on the number of grinders required.

The impact of reducing the hourly rate to $106.25 reduces the trucking cost and has no effect on either the net emissions or number of trucks required. Because the estimated trucking costs differ for each business unit, the magnitude of the cost reductions also vary and were plotted by business unit. Conversely, increasing the hourly rate to $143.75 increases the trucking cost and has no effect on either the net emissions or number of trucks required.

The impact of reducing the speed to 29.8 kph loaded and 42.5 kph empty increases trucking cost, lessens the net emissions impact by 470 tonnes/year eCO 2 and increases the number of trucks required by 6.2 units. As above, the cost reduction varies by business unit. Conversely, the impact of increasing the speed to 40.3 kph loaded and 57.5 kph empty decreases trucking cost, improves the net emissions impact by 352 tonnes/year eCO 2 and decreases the number of trucks required by 4.7 units.

The impact of reducing the size to 11 VU (18.5 Gt) increases trucking cost, lessens the net emissions impact by 843 tonnes/year eCO 2 and increases the number of trucks required by 11.2 units. Conversely, the impact of increasing the size to 20 VU (33.6 Gt) decreases trucking cost, improves the net emissions impact by 974 tonnes/year eCO 2 and decreases the number of trucks required by 12.9 units.

Lastly, the impact of reducing the one way haul distance by 10 km reduces trucking costs, improves the net emissions impact by 546 tonnes/year eCO 2 and decreases the number of trucks required by 7.3 units. As above, the cost reduction varies by business unit. Conversely, the impact of increasing the one way haul distance by 10 km increases trucking costs, lessens the net emissions impact by 546 tonnes/year eCO 2 and increases the number of trucks required by 7.3 units.

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3. Analysis of Selected Value-Added Technology Pathways

3.1 Sector Profile: Torrefaction

3.1.1 Introduction

Annually, photosynthesis is estimated to store 5-8 times more energy in biomass than humanity currently consumes from all sources. Biomass is currently the fourth largest energy source in the world – primarily used in less developed countries and could in principle become one of the main energy sources in the developed world. Although the actual role of bio-energy will depend on its competitiveness with fossil fuels and on government policies worldwide, it seems realistic to expect that the current contribution of bio-energy of 40–55 EJ per year will increase considerably. A range from 200 to 300 EJ may be estimated looking well into this century, making biomass a more important energy supply option than mineral oil today.

Motivated by transition to a more sustainable society, renewable biofuels are expected to replace fossil fuels gradually. Carbon dioxide emissions from using biomass as a fuel are perceived as neutral because carbon dioxide is fixed by photosynthesis in a relatively short period. Nevertheless, it is important to use efficient biomass conversion technologies. For example, the future energy industry could use gasification rather than combustion of biomass. Relatively inefficient combustion of solid fuels in boilers and production of electricity in steam-Rankine cycles was common practice in the 20 th century and remains so today. The use of producer gas from wood gasifiers, which could be used in modern devices such as gas turbines, fuel cells or catalytic reactors, is still limited. Many of the problems in wood gasification are related to the properties of the fuel. Although wood is a clean fuel with low nitrogen, sulphur and ash content, it is thermally unstable.

3.1.2 Cell Structure of Biomass (Lignocellulose)

Lignocellulose is another word for biomass that originates from plants. It generalizes the structure of plants to the three main sugar-based polymeric structures; cellulose, hemicellulose and lignin. These three polymeric structures are mainly considered in most of the studies aiming for the understanding of decomposition mechanisms of woody and herbaceous biomass. In plant structures lignocellulose normally forms the most dominant group of constituents on a mass basis. Its main role is found in the cellular structure of plants and forms the foundation of cell walls and their mutual coherence. Lignocellulose provides mechanical strength and tenacity (toughness) to plant structures and so provides body and the opportunity to grow in height.

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Figure 3.1 Plant Lignocellulose Structure

Every type of green biomass has its own typical lignocellulose composition. Table 3.1 summarizes the lignocellulose composition of some biomass species. Woody types of biomass are commonly divided into coniferous (larch, pine, fir) and deciduous (beech, willow) categories. Next to that a group of herbaceous species (straw) is commonly defined

Table 3.1 Lignocellulose composition of different biomass types and typical polymeric composition of deciduous and coniferous wood types (Holzatlas, 1974)

Coniferous wood is typically high in lignin content, compared to deciduous wood and especially compared to herbaceous species. A big difference between deciduous and coniferous wood is found in their composition of the hemicellulose fractions. Whereas deciduous wood predominantly consists of xylan-based hemicellulose, coniferous wood predominantly consists of mannan-based hemicellulose. An

21 Options for Value-Added Processing of Coastal Forest Debris important research parameter is the type of biomass, the composition of which determines its behavior in the different process. Deciduous wood types as well as coniferous wood types are considered. These types are often referred to as hard wood and soft wood, respectively.

There is not much difference in the distribution of the three wood fractions between these types. Coniferous wood may contain slightly more lignin than deciduous wood (25–35 wt% versus 18–25 wt. %), slightly less cellulose (35–50 wt% versus 40–50 wt. %) and, on average, comparable amounts of the hemicelluloses (20–32 wt% versus 15–35 wt. %). However, the composition of the polysugars that form the hemicelluloses fraction is very different. In the case of deciduous wood, the hemicelluloses contain 80–90 wt% of 4-Omethyl glucoronoxylan (referred to as xylan) whereas they contain 60–70 wt% of glucomannan and 15–30 wt% of arabinogalactan for coniferous wood. The thermal behaviour of these components may be different. Therefore, it is an important question whether the thermal behaviour of deciduous and coniferous wood types is the same.

3.1.3 Energy Content in Wood

Generally, the heating value of a fuel may be reported on two bases, the higher heating value or gross calorific value and the lower heating value or net calorific value. The higher heating value (HHV) refers to the heat released from the fuel combustion with the original and generated water in a condensed state, while the lower heating value (LHV) is based on gaseous water as the product. The heating value of a biomass fuel can be determined experimentally by employing an adiabatic bomb calorimeter, which measures the enthalpy change between reactants and products. Biomass is composed of elements C, H, O, N, S, and Cl, where the former three are the major, representing up to 97–99% of the biomass organic mass. Ultimate analysis gives the weight percent of the elements. The HHV increases with the increase of C and H contents, consistent with common sense that higher C and H contents mean a higher energy content of a biomass. On the other hand, it is generally considered that oxygen is not a reactive element and increasing the O content leads to a decrease of the HHV because it is replacing C in wood structure. Every different species has a specific heat value and the different parts of a plant have their own heat values, but the majority of biomass species used as an energy source through combustion have a HHV range of 12-19 GJ/ton.

3.1.4 Torrefaction

Biomass can be exploited to produce energy using different technologies: thermochemical (combustion, gasification), biological (anaerobic digestion, fermentation) or chemical processes (esterification). The direct combustion of biomass represents the most promising solution in the short term. However, the use of raw biomass material as a fuel entails several problems, such as its high bulk volume, high moisture content and relatively low calorific value, which make raw biomass an expensive fuel to transport. For biomass to produce an equivalent amount of energy as a fossil fuels such as coal, very high loads of this material would be needed. Another drawback of some types of biomass is that it is difficult to grind if fine particles have to be obtained from lignocellulosic materials. This problem is especially acute when biomass is to be used in pulverized systems, such as cofiring with coal in large scale utility boilers. All of these drawbacks have given rise the development of new technologies in order to increase the quality of biomass fuels.

Conventional wood pellets address some of these points, producing a more homogenous product with low moisture content and greater bulk density, but they still require more careful treatment and storage than coal. Torrefaction and other emerging pre-treatment processes offer the promise of tackling many of these concerns; increasing calorific value and bulk density whilst improving grinding characteristics and facilitating outdoor storage. Proponents of these new bio-fuels anticipate that they will become the fuel of

22 Options for Value-Added Processing of Coastal Forest Debris choice once demonstrated at scale and may render wood chips and conventional pellets redundant for ‘long-haul’ industrial uses of biomass energy.

Torrefaction is a thermo-chemical treatment of biomass in the 200 to 340 degrees Celsius range carried out in an oxygen starved environment. In this process the biomass (especially the hemi-cellulose) partly decomposes, giving off various types of volatiles. The remaining torrefied biomass (solid) has approximately 30% more energy content per unit of mass. Torrefaction is a kind of mild pyrolysis process that improves the fuel properties of biomass. At lower temperatures, now developed between 200°C and 300°C, torrefied products and volatiles are formed.

If the temperature is increased to 200 oC hemicellulose starts limited devolatilization and carbonization (the biomass starts to become brown). Hemicellulose decomposes into volatiles and a char-like solid product. Extensive devolatilization occurs when a temperature around 250 to 260 oC is reached. In this temperature range lignin and cellulose also slightly decompose, which does not lead to a significant mass loss. After drying at 100 oC, further heating removes chemically bound water due to thermo-condensation o reactions, which occurs at temperatures over 160 C. At this temperature the formation of CO 2 also starts. Since different biomass resources consist of various fractions of hemicellulose, lignin and cellulose a variation in reactivity can be found among these resources.

At 200 oC, thermal decomposition begins to occur. Xylan, the main hemicellulose component of deciduous wood, is the most reactive component. It starts decomposing around 200 oC and has a high weight loss. The cellulose decomposition rate is very low in the temperature range used. This is in agreement with results of most studies. Cellulose may depolymerise at low temperatures, but volatilization of the cellulose is very slow below 250 oC.

At 267 oC, limited weight loss of cellulose is found. Coniferous wood reacts a lot slower than hardwoods. Although some researchers have attributed the lower weight loss for coniferous wood to higher lignin content, experiments show that differences in composition of the hemicellulose fractions in deciduous and coniferous wood (xylan- and mannan-based, respectively) may be the main explanation.

As a preliminary conclusion, hardwood looses considerably more weight than softwood and therefore has a higher increase in energy density (J/g). This makes hardwood an attractive feedstock for torrefaction processes. The reactivity of hemicellulose very much depends on its molecular structure so that a large difference is observed between deciduous and coniferous wood. Torrefaction of deciduous wood leads to more devolatilization and carbonization than torrefaction of coniferous wood.

In torrefaction, the fast initial reaction, in which the highly reactive hemicellulose is decomposed, is important. This reaction stage should go more or less to completion. The second reaction stage, which could represent cellulose decomposition and secondary charring reactions of hemicellulose reaction products, takes much more time to complete, which may lead to uneconomically large equipment. At temperatures above 300– 320 oC, fast thermal cracking of cellulose may cause tar formation, so that operation below 300 oC is recommended.

3.1.5 Products of Torrefaction

The differences in reactivity of hemicellulose, cellulose and lignin are the reason to distinguish between two various torrefaction regimes, A light torrefaction takes place below 240 oC and is characterized by a significant decomposition of hemicellulose whereas cellulose and lignin are only slightly affected. A severe torrefaction occurs above 270 oC and is characterized by a noticeable effect on cellulose and lignin. Above 200 oC, the torrefaction reaction occurs where devolatilisation takes place. Finally, the solid product is cooled to below 200 oC, which terminates the torrefaction process. During torrefaction, biomass

23 Options for Value-Added Processing of Coastal Forest Debris looses relatively more oxygen and hydrogen than carbon. Subsequently, the calorific value of the product increases

During torrefaction numerous different products are formed depending on the torrefaction conditions such as reaction temperature, residence time and biomass properties. As result of partial decomposition of biomass during this process, the chemical composition of original biomass changes as is shown in the van Krevelen diagram in Figure 3.2. The van Krevelen diagram gives information about the differences in the elemental composition (C,H,O ratio). In this figure the composition of typical fuels such as coal, lignite, peat biomasses is shown. It is clear that biomass compared to coal contains more oxygen.

Figure 3.2 H:C and O:C plot identifying torrefaction region

Torrefaction has a big influence on the properties of the solid product, mainly caused by the removal of oxygen from the original solid biomass resource. The van Krevelen diagram for torrefied wood shows how the properties of the solid product are influenced and become more coal like. It can be seen that biomass looses relatively more oxygen and hydrogen and its properties change in the direction of carbon. In this way the net calorific value (LHV) is influenced and the product increases in energy density. The solid product retains a high percentage of the energy content of the biomass feedstock, condensable gases such as water vapor, acetic acid and other oxygenates and non-condensable gases mainly carbon dioxide, carbon monoxide and small amounts of hydrogen and methane but also furfural, formic acid, methanol, lactic acid, phenol and others - all useful things when a catalytic converter is used to convert the CO to CO 2.

3.1.6 Mass and Energy Balance

Two of the most important parameters in evaluating torrefaction are the mass and energy yield of the process. When looking at the macro composition of biomass, it can be expressed in terms of loosely bound water, organics and ash. The organic part of the biomass contains all the (reactive) chemical energy and during torrefaction part of this energy is removed in the form of reaction products. Therefore, from a fundamental point of view, it is best to express the mass and energy yield on a dry and ash-free basis:

 m  η =  char  M  m   feed  daf

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 LHV  η = η  char  E M  LHV   feed daf

Torrefaction experiments revealed that the process produces a dry, hydrophobic product with an increased energy density. The energy retained in the solid product is in the range of 83% to 97% (LHVdaf) and typically 90%. On average, the energy yield also decreases with temperature, but unfortunately this cannot be statistically verified due to a relatively large inaccuracy in the determination of heating values (± 6%). It is argued that mainly a higher extent of dehydration with increasing temperature explains the interrelation between mass and energy yields. Increasing the torrefaction temperature from 250 to 270°C reduces the required reaction time from 15-30 min. to 8-15 min.

The energy efficiency of a torrefaction process is commonly reported as the Net Thermal Process Efficiency: that is, the ratio between the energy yield in the product and the total energy (feedstock plus process input). Some studies suggest that commercial torrefaction can be realized at the efficiency of 90% but the most likely scenario would have the process efficiency of 80% or lower, depending on moisture content of biomass feedstock. Thermal efficiency of torrefaction can be increased by the use of gaseous and liquid product produced during torrefaction as an energy source for the process heat.

Combustible gases accounted for about 50% of non-condensable gaseous torrefaction products. Effective use of the torrefaction gases can save energy and improve efficiency. A typical mass and energy balance for woody biomass torrefaction is that 70% of the mass is retained as a solid product, containing 90% of the initial energy content. The other 30% of the mass is converted into torrefaction gas, which contains only 10% of the energy of the biomass. Energy densification with a typical a factor of 1.3 can be attained. This is one of the fundamental advantages of the torrefaction process, as the energy density of torrefied wood is significantly higher compared to untreated wood.

3.1.7 Torrefied Product Characteristics

Heat value Torrefaction removes moisture and low energy volatiles from the roasted wood, producing a product that is more energy dense (more energy per unit of weight) than wood, almost as dense as coal, and easier to grind. The net calorific value of torrefied biomass is in the range of 18–23 MJ/kgLHV (dry) or 20–24 MJ/kgHHV (dry).

Hydrophobicity Feedstock moisture ranges from 10% - 50+%. The torrefaction process completely dries the biomass and the resulting material has 1%-6% moisture. This provides two main benefits because the resulting feedstock has a consistent moisture level for the conversion process and it reduces transportation costs associated with moving unwanted water. The resulting chemical conversion also stops the biomass decomposition and moisture absorption. The moisture uptake of torrefied biomass is very limited due to the dehydration reactions during the torrefaction reaction. Destruction of OH groups in the biomass by dehydration reactions causes the loss of capacity to form hydrogen bonds with water. In addition, non- polar unsaturated structures are formed which makes the torrefied biomass hydrophobic.

Grindability For size reduction processes, the main characteristics are power consumption, equipment capacity, and product quality. The first two determine the economics of the size reduction process itself and the last one is important for the application of resulting particles as a feedstock for an entrained-flow gasifier. The overall characteristics of size reduction are greatly improved by the application of torrefaction. Torrefaction of wood reduces the power consumption required for size reduction by 50-85%, depending on the applied torrefaction conditions. Biomass resources have a tenacious and fibrous structure which makes it rather difficult to grind as required for co-firing in existing coal fired stations or other pulverized systems. Large energy consumption is required to achieve a small particle size for typical

25 Options for Value-Added Processing of Coastal Forest Debris biomass, such as wood. Torrefaction improves the grindability of biomass resources. Experiments show that the power consumption needed for grinding torrefied biomass can be reduced by 80-90% in comparison with untreated biomass. The first step of hemicellulose decomposition proceeds quickly. It is believed that this step is responsible for the reduction in power consumption required for grinding.

Below 250°C, the reaction rate is limited and the reduction in power consumption is only 50% compared to untreated biomass of 12% moisture content, but is comparable to bone-dried biomass. From 250°C and 30 min reaction time, the reactions proceed sufficiently fast to obtain the maximum reduction (85%). The grinding experiments of torrefied pine chips and logging residues were performed by Phanphanich and Mani. They found that grinding energy of torrefied biomass was reduced to as low as 24 KWh/t after torrefaction at 300 oC. Specific energy consumption for grinding torrefied biomass was reduced 10 times for torrefied wood chips and up to 6 times for torrefied logging residues. The specific grinding energy consumption decreased linearly with the increase of torrefaction temperature.

3.1.8 Impact of Torrefaction on Combusting and Gasification Quality

Combustion reactivity of the torrefied biomass has been evaluated. The carbon conversion of woodcuttings was measured as 96.1%, while torrefied woodcutting was measured as 96.6%, low volatile coal as 64% and high volatile coal as 81%. It was observed that the carbon conversion of torrefied biomass was comparable to that of woodcuttings and significantly higher compared to low or high volatile coal. Because of the shortening of the fibers through torrefaction, the particles resulting from the size reduction process become more spherical (i.e., they have a smaller length-to-diameter ratio), which improves their fluidization behavior.

Qualitative particle analysis (shape) gave the impression that the length-to-diameter ratio of the particles decreases with increasing temperature. Smooth fluidization requires an A powder according to the well- known Geldart classification. This means that a powder with a size range of approx. 30-400 µm should be produced. The shape and size of the ground torrefied biomass is very suitable for feeding in a fluidized bed gasification reactor.

Torrefied biomass has excellent combustion properties; the fuel can be readily co-fired with coal, further gasified or fed to pyrolysis units. Raw biomass is typically thermally unstable which usually leads to formation of condensable tars in gasifiers, creating problems in down-stream equipment such as choking and blockage of piping.

3.1.9 Co-firing quality

Co-firing torrefied wood represents the most efficient, near-term solution for coal-fired utilities to meet growing energy demand as well as stiffer environmental standards. It has been tested to 10% and will likely go to a 30% mix with coal without negatively impacting electricity production. Unlike carbon sequestration, which has an estimated capital cost of more than $1B, torrefied biomass requires little, if any, capital investment on the part of utilities. This fuel can be delivered below the cost of coal when carbon credits are a factor. It will allow coal-fired utilities to meet the 2020 standards without a significant increase in the cost of electricity to consumers.

The properties produce the following benefits for the coal-fired electrical utility:

1. Each ton of torrefied wood burned in the facility reduces their carbon output by up to 2.4 tons, earning them an estimated $72 in carbon credits.

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2. Torrefied wood can be handled just like coal. It can be placed on the coal pile and processed alongside the coal. It has been tested to 10% and will likely go to 30% mix with coal. 3. It does not take on water so it can be left uncovered like coal. 4. It has lower levels of NOx and SOx than coal—primary pollutant emissions by EPA—lowering emissions and associated costs 5. During the torrefying process, most volatiles are burned off, eliminating the concerns over slagging in the boiler. 6. Because torrefied wood is handled identically to coal, little or no incremental capital is required of the utility

The pre-treatment step has a significant influence on the performance of bioenergy chains, especially on logistics. Under current conditions it is important to have technologies allowing conversion of biomass at modest scales into dense energy carriers that ease transportation and handling.

The results showed that during the torrefaction process the moisture content of biomass was reduced, and the wood fiber structure of the material was destroyed. This was beneficial to storage, transport and subsequent treatment of biomass at large scale.

3.1.10 Existing and Developing Torrefaction & Auxiliary Equipment/Processes

Biomass collection The torrefaction process starts with field harvesting of biomass. Harvesting begins with cutting or shearing of trees or other plants. Cutting or shearing may refer to harvesting a plant such that the root system of the plant remains embedded in soil. Cutting or shearing may allow for sustainable harvesting of species of plants that may re-propagate or re-grow after cutting or shearing, leaving the remaining trunk of a cut or sheared tree or other plant and thus providing for re -harvesting from the same plant or tree at a later time. Harvesting continues with collecting and staging of the cut or sheared biomass. Collecting and staging may include collecting, with appropriate equipment, the cut or sheared biomass and staging for grinding or chipping.

Grinding or chipping include using a commercially-available wood hog, wood grinder, wood chipper, or other similar apparatus that may receive collected biomass as an input and produce as output chips of a desired size. Grinding or chipping of biomass in the field increases the volume of biomass that can be transported from a harvest site by a truck, trailer, or other vehicle. In some plants after grinding or chipping of biomass, biomass chips may be subject to screening in the field. Screening may be performed by one or more screening systems or other similar devices capable of segregating chips by size, weight, shape or other physical characteristics.

Transport & Screening After grinding or chipping biomass chips get loaded into trucks, trailers, and other vehicles for transportation to a plant for further processing, including torrefaction. From the harvesting place biomass is transported to plant chip yard, or other suitable facility. By using one or more screening systems, masks, or other similar devices the feedstock is segregated into those that have suitable size and those deemed unsuitable for torrefaction and requiring milling to a smaller size. Oversized chips are reduced in size by milling. Additional screening may be performed after milling to segregate chips into acceptable, rejects, or oversized.

Acceptable biomass is conveyed to a dryer where some biomass rejected for the torrefaction process can be used as solid, untorrefied fuel for combustion. In some plants unscreened biomass from receiving may be conveyed to the burner as fuel. Torrefaction systems also include any number and any suitable types of conveyors configured to convey biomass and other material between or within various components of torrefaction system. The range of such conveyors may include a chain conveyor, belt conveyor, drag

27 Options for Value-Added Processing of Coastal Forest Debris conveyor, vibratory conveyor, walking-floor conveyor, piston conveyor, screw conveyor, pneumatic transfer conveyor, or any other suitable conveyance system for transporting biomass.

Pre-drying The dryer may include an oven, kiln, or other suitable heating apparatus. In some cases these include a direct-fired triple-pass rotary biomass dryer. Heat is generated by a burner and transferred via a thermal conduit like air, thermally-conductive oil, or other fluid present in the conduit, in order to transfer heat to the biomass via conductive, convective and radiant heat transfer. During the drying process, biomass gives off water vapour, light volatile organic compounds (VOCs), biomass particulates, and other matter.

Biomass and air from the dryer are conveyed to a separator. A separator includes any device configured to separate gasses and particulates from larger, solid biomass (e.g. cyclonic separation). A portion of the separated gasses and particulates is re-circulated to the burner in order to prevent environmental pollution that may be caused by excessive discharge of VOCs, vapors, and particulates. A portion of the exhausted gas that is combustible after separation and drying is combusted in an afterburner to produce heat for the preheater. This heated gas is returned to the reactor in direct contact with the biomass or the heat is transferred through heat exchangers.

3.1.11 Pretreatment Options

The raw cellulose feedstock is bulky and has high moisture content. These undesirable natural characteristics make raw biomass difficult and costly to transport and store. A herbaceous or a woody biomass is heterogeneous in compositional and anatomical features. The biomass content of cellulose, hemi-cellulose, lignin, proteins and fats vary among plant species and plant parts. Similarly ash content and the elements that make up the ash depend upon species, growing and harvest conditions. From an anatomical perspective, the fibers from stems, leaves, bark, and heartwood (deciduous, coniferous) have distinctive attributes. An advanced design would take advantage of these attributes for early fractionation of a raw biomass to optimize thermal treatments. A more uniform feedstock can then be blended and densified more effectively than a mixture of heterogeneous materials.

Figure 3.3 is a block diagram showing the post harvest operations by which the biomass is converted from a raw state to a flowable solid. The raw material is deconstructed into its fractions; in the case of cellulose to anatomical fractions such as leaves, stem, bark, etc. The degree of fractionation would vary with the dependence of the thermal treatment unit performance on feedstock. Prior to its introduction to the thermal treatment unit (TTU), the feedstock is examined for its suitability for thermal treatment. The material is recycled back to the deconstruction and fractionation stage if it does not meet the TT performance requirements.

Figure 3.3. Major unit operations for advanced biomass pre-processing to produce flowable materials

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Deconstruction and separation

Figure 3.3 shows that deconstruction is the first process in the supply chain. Deconstruction consists of one or several size reduction operations where the biomass size is reduced to a specification where it can be thermally treated with the highest efficiency. The biomass specification following a size reduction would depend on the nature of TT. For example, for a fast pyrolysis where a high heat transfer is essential, the particle size is required to be as small as possible – as long as feeding to the pyrolysis reactor is not an issue. Conversely for slow carbonization (torrefaction) processes that are slower than fast pyrolysis, larger particles would be acceptable.

Size reduction and thermal treatment, therefore are highly inter-dependent and the performance of the integrated system would depend upon the size and structural makeup of the biomass. An advanced design for deconstruction would take advantage of all physical and chemical attributes of the biomass. These attributes include, size, shape, surface characteristics, color, density, moisture and chemical composition. An initial sorting of raw biomass into its components, prior to its deconstruction, will reduce dramatically the loads on grinding and separation equipment. The net results will be smaller size equipment for lower capital cost, lower operating costs, and superior quality feedstock.

The thermal treatment block depicted in Figure 3.3 consists of all operations that are used either to adjust the moisture content (e.g. drying) of the biomass and/or increase the value of the biomass by various heat treating processes. Torrefaction, for example, is a reduced temperature and slow pyrolysis of biomass in the absence of oxygen producing a high percentage of carbonized solids “biochar”. The biomass looses up to 30% of its weight in volatiles. The combusted volatiles may be recycled as the heat source for the carbonization process to minimize the dependence of the system on external heating. A pelletized char has a longer shelf life than untreated pellets.

Several forms of carbonization processes are vigorously pursued by research centers and commercial enterprises throughout the world. The processes under development vary from batch to continuous and from fixed to fluidized beds. The most economical configuration has yet to be optimized and the details of energy and mass balances on a well designed system have yet to be worked out (or published). There are several pilot scale systems. The challenge is with respect to the uncertainty of the performance of these systems upon scaling up.

Another thermal treatment example is steam pre-treatment. This is a process by which biomass is introduced into a reactor, heated under high steam pressure at elevated temperatures and discharged by sudden release of pressure. The abrupt change in pressure leads to the fracture of the cell structure and to activate lignin. There is evidence that pellets made from steam treated biomass have superior durability, hydrophobicity, and shelf life. In addition, particles of a steam treated biomass have a larger surface area and can be torrefied more easily.

Steam pre-treatment has been extensively studied and proven as an essential pretreatment technology to enhance the recovery of sugars and yield of useful chemicals and fuel conversion from wood residues and agricultural crops. Similar to torrefaction, and depending on the severity of steam treatment, steam pre- treatment may lead to net mass loss in hemicelluloses. If the ratio of steam (steam quality) and biomass is not balanced this may lead to increased biomass moisture and additional drying.

Optimizing the severity of the thermal treatment process and closing mass and energy balances are among the objectives of this research and development. A detailed account of the mass and energy balances on individual thermal treatment operations and the assembly of these systems in a production line would allow a realistic assessment of the cost/benefits of these advanced technologies.

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Blending and Densification

Blending is the critical stage of formulating a feedstock to meet the exacting materials specifications. A biorefinery would require certain attributes that would ensure the highest conversion efficiency of a feedstock to biofuel or other bio products. This specification may include one or a combination of the following attributes: moisture content, particle size, bulk and specific density, color, ash, cellulose, hemicellulose, and lignin. Streams of these materials will be blended to ensure a densified biomass mixture with predictable performance. Blending may also include size reduction processes on a stream or on a mixture to ensure the supply of a specific size and well mixed ingredients to a subsequent densification process.

Blending can also involve the chemical pretreatment of biomass. Substantial recent progress has been made on pre-treatment of lignocellulosic biomass for the production of chemicals and ethanol. The cellulose-hemicellulose-lignin matrix can be broken down to smaller amorphous molecules through acid or alkaline hydrolysis. When high molecular amorphous polysaccharides are reduced to low molecular components, the polymer becomes more cohesive in the presence of moisture. Increased moisture content resulting from chemical and enzymatic treatments is a problem, as the treated biomass has to be dried prior to densification.

Biomass has a low bulk density, making it difficult and costly to store and transport in a loose form. Bulk density that also includes the airspaces within the bulk reduces the overall density of the load to about 34 lbs/ft 3. This bulk density is slightly higher than the target bulk density of 30 lbs/ft 3. Dense pellets have flowability similar to those of cereal grains, thus, they can be handled in conventional grain handling systems. When densified using traditional pellet mills, many types of biomass, especially those from straw and switchgrass, result in poorly formed pellets or compacts that are more often dusty, difficult to handle and costly to manufacture. This results from a poor understanding of the binding characteristics of the molecules making up the biomass.

Much recent progress has been made in understanding current pressure-extrusion pelletization and the main contributing factors in making durable pellets. These factors include mechanical forces, steam explosion pretreatments, particle size, chemical constituents of cellulosic biomass, and binding properties. But the level and interaction of these process parameters and material properties have yet to be clearly understood and quantified. In-depth understanding and quantification of these factors will lead to the development of robust design and operation of existing low pressure extrusion presses and possibly to the development of new granulation techniques including cubing and briquetting to replace the existing age- old inefficient pellet mills.

3.1.12 Characteristics of torrefaction reactors

A torrefaction reactor includes any oven, kiln, or other heating apparatus suitable for heating biomass to a desired temperature (e.g., approximately 230°C to approximately 300°C) over a desired period of time in an oxygen deprived-environment to a desired temperature for torrefaction. It may include a suitable conveyor for conveying biomass from the input of a preheater to the output of the reactor. A torrefaction unit receives heat from a heat transfer system via conductive, convective, or radiant heat transfer. In certain units, the heat transfer system may use electric block heaters directly attached to the torrefaction reactor and the heat from a burner is used to create electricity for the block heaters as opposed to providing heat directly to the torrefaction reactor.

The combination of a preheater and a torrefaction reactor may provide for a multiple-phase torrefaction process. For example, the combination of preheater and torrefaction reactor is suitable for a two-phase torrefaction process. In the first phase, the preheater heats biomass from the temperature after drying to

30 Options for Value-Added Processing of Coastal Forest Debris the temperature that is the approximate desired torrefaction temperature. If the preheating process temperature is controlled under 180 oC, this part of process will not need oxygen deprivation. In the second phase, the torrefaction reactor maintains the biomass at the required designed torrefaction temperature (e.g., approximately 230° to approximately 300°C). The preheater heats biomass to a temperature at which moisture from biomass evaporates, but which is below the temperature at which the biomass may release significant amounts of volatile organic compounds.

In some torrefaction plants the preheater may not be present or is coupled to the torrefaction unit. That is called a single-stage torrefaction process. In such a system biomass is heated from a temperature of approximately 50 oC at its input to approximately 230°C - 300°C at its output. As an example, the Thermya Company has developed and patented a biomass torrefaction / depolymerisation process called TORSPYD. It is a homogeneous soft thermal process that takes place in an inert atmosphere. The process progressively eliminates the biomass water content, transforms a portion of the biomass organic matter and breaks the biomass structure by depolymerisation of the fibers. This process of torrefaction is considered single-stage torrefaction.

In certain applications, a multi-stage torrefaction process may be preferred because it may provide for the desired decomposition of certain components of the biomass while reducing or eliminating decomposition of other components as compared with a single-stage process. In each of the single-phase and multiple- phase torrefaction processes described above, heating of biomass in the torrefaction reactor causes torrefaction of biomass, in which an approximate 10% reduction in energy content of the biomass and an approximate 30% reduction in mass of the biomass occurs.

The reduction in energy content is caused by the decomposition of the biomass. Torgas that exhausts from torrefaction reactor is responsible for the energy content reduction of torrefied materials. It can be circulated and used as fuel for the furnace. Such use of torgas as a fuel for furnace renders the process into an autothermal torrefaction system. In some systems, torgas may also be refined and segregated into its component gasses, which may then be stored, sold or used for fuel for applications other than for use in the system.

As described above, a reduction in mass of biomass during torrefaction is caused by reduction in the moisture content and the volatilization of organic compounds produced by preheater and torrefaction reactor. These gases provide fuel for combustion that helps the system operate autothermaly and require relatively little or no fuel other than torgas. In some designs the system requires more heat than can be provided based on its specific design by combusting biomass or an available natural gas source. The furnace can receive its fuel from three sources (biomass combustion, torgas, and some fraction of traditional fuel for startup). The dryer, preheater, and torrefaction reactor form an integrated torrefaction system. The mass and energy balance, fuel supply, heat transfer, emissions control, and operation are shared in a way to optimize overall performance of the integrated system.

An airlock or suitable conveyor conveys torrefied biomass from the torrefaction reactor to a stabilizer/conditioner which stabilizes torrefied biomass to reduce or eliminate the possibility of spontaneous combustion while preparing the torrefied biomass for densification. It includes cooling the torrefied biomass. Exposure of the biomass to ambient air at the completion of torrefaction without cooling may cause combustion due to oxygen content in the air. Conditioning includes increasing moisture content in the torrefied biomass that acts as a lubricant during densification. Conditioning may also include maintaining the biomass above a particular temperature in order to achieve properties desirable for densification. Substantial simultaneous stabilization and conditioning eliminate the need for a separate conditioning step prior to densification.

To condition torrefied biomass, the conditioner may apply water and/or other liquid to torrefied biomass. Spraying of liquid on biomass causes cooling of the biomass and generation of steam. This generation of

31 Options for Value-Added Processing of Coastal Forest Debris steam further prevents combustion of the torrefied biomass. Steam generation forces any oxygen present in conditioner away from the biomass. The torrefied biomass is carried from the reactor to the conditioning unit and from there to the densification unit using a conveyor. It may include a chain conveyor, belt conveyor, drag conveyor, vibratory conveyor, screw conveyor, pneumatic transfer conveyor, and any other suitable conveyance system.

3.1.13 Torrefaction technology comparison

Several different technologies are listed in the following three tables with each technology’s specifications, advantages and disadvantages. For example a fluidized bed has a high heat transfer rate but it works best for certain sizes of feedstocks with the particle size distribution in a narrow range. The table also summarizes current commercialization projects being undertaken by leading torrefaction technology developers.

Table 3.2 Technology Assessment & Deployment

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Table 3.3 Technology Comparison

Table 3.4 Commercialization Projects

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3.1.14 Torrefaction cost analysis

As an emerging technology with few demonstration plants in operation, the literature on the capital and operating costs of torrefaction is sparse. That paucity of information began to change in June 2011 with the publication in Biofuels, Bioproducts & Biorefining of a paper by Shah, A. et al entitled Techno- economic Analysis of a Production–scale Torrefaction System for Cellulosic Biomass Upgrading . For this work the paper’s authors developed a mathematical model in Matlab using Simulink dynamic modeling tools, segmented into operational modules.

They found that unit torrefaction capital costs were in the range of 0.1 – 0.3 M $-(Tton.hr -1)-1 [$100,000 – 300,000/Torrefied ton/hour]. For biomass with initial moisture content in the range 0 – 60% wb , unit torrefaction process costs were in the range 16 – 27 $/Tton -1 [$16 – 27/ Torrefied ton] at the typical process temperature of 240 oC. Expressed in the metric terms used in this report, these estimates equate to capital cost of 0.11 – 0.33 M $-(Ttonne.hr -1)-1and operating costs of 17.64 – 29.76 $/Ttonne. For a plant with a designed output of 5.0 tonnes/hour of torrefied biomass operating on a 24 hour/day, 330 days/year basis, this translates to an estimated capital cost of $550,000 – $1,650,000 and operating costs of $139,710 - $235,700 per year.

The authors tested the sensitivity of the model outputs to changes in feed moisture, torrefaction process temperature, annual operating window and initial capital cost. They found that feed moisture content is one of the most influential parameters in the process and that initial capital cost is one of the other most important metrics for the economic sustainability of production-scale torrefaction systems.

3.1.15 Torrefaction challenges

For all its benefits, torrefaction is an extra step to feedstock preparation that takes energy and money. In addition, the particular conditions used for the process can result in differing end-product quality Inconsistency in feedstock particle size and moisture content is a concern because variations in heat transfer result in uneven carbonization,. The smallest pieces will turn to charcoal whereas the larger pieces will not be fully torrefied. Small particles are also a limitation for some torrefaction technologies because they can cause clogging and obstruction of gas flow.

Control of the reactor is also a challenge in terms of getting the right dynamic time and temperature strategy to deal with moisture, particle size, and volatile content. Fouling in the reactor vessel needs to be avoided. Within the gas loop, there can be inefficient use of volatile calorific content and fouling of ductwork. In densifying torrefied materials, high feedstock temperature and the highly reactive dust can also present a risk of explosions and fires.

Process optimization- although some progress has been achieved with pilot plant testing, real commercial plant operating performance, mass and energy yield, production quality and production cost are important. At this time there are no commercial plants in operation and it is challenging for developers to invest in full commercial plants when process modifications may be required.

The torrefaction product needs to be validated by long term application that it meets specifications and is a sustainable fuel.

Most technology developers are small companies with a limited financial base. Bringing in investors is a challenging effort. Also, for standardization of the product, there is a need to make the market more transparent and reliable. There is not enough production of torrefied material to create standardization of the product. The demand currently exceeds supply but it is challenging for a producer to scale up production.

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3.1.16 Environmental challenges

Biomass power, derived from the burning of plant matter, raises more serious environmental issues than any other renewable resource except hydropower. Combustion of biomass and biomass-derived fuels produces air pollution; beyond this, there are concerns about the impacts of using land to grow energy crops. How serious these impacts are will depend on how carefully the resource is managed.

Air Pollution The combustion of biomass produces air pollutants, including carbon monoxide, nitrogen oxides, and particulates such as soot and ash. The amount of pollution emitted per unit of energy generated varies widely by technology. Emissions from conventional biomass-fueled power plants are generally similar to emissions from coal-fired power plants, with the notable difference that biomass facilities produce very little sulfur dioxide or toxic metals (cadmium, mercury, and others). The most serious problem is their particulate emissions, which must be controlled with special devices. More advanced technologies, such as the whole-tree burner (which has three successive combustion stages) and the gasifier /combustion turbine combination, should generate much lower emissions comparable to those of power plants fueled by natural gas.

Environmental impact The environmental effects of using biomass as a source of fuel vary according to the type of conversion technology. The combustion of biomass produces significantly fewer nitrogen oxides and sulphur dioxide than the burning of fossil fuels. Unlike fossil fuel combustion, the use of biomass fuels in a well-managed, sustainable production program will not contribute to carbon dioxide levels that cause global warming. Conversely, if large sparse areas are converted into biomass plantations, the overall increase in vegetation cover will reduce atmospheric carbon dioxide levels. In fact, massive reforestation can provide a partial answer to global warming. Yet improper management of energy farms could create serious environmental problems such as topsoil erosion, depletion of nutrients, soil salinization and water pollution due to fertilizer and pesticide runoff. With proper planning, energy farms will be able to provide sustained yields without depleting the land.

The use of biomass energy has many unique qualities that provide environmental benefits. It can help mitigate climate change, reduce acid rain, soil erosion, water pollution and pressure on landfills, provide wildlife habitat, and help maintain forest health through better management. Human activity, primarily through the combustion of fossil fuels, has released hundreds of millions of tons of greenhouse gases (GHGs) into the atmosphere. Biomass energy technologies can help minimize this concern. Although both methane and carbon dioxide pose significant threats, CH 4 has ~20 times the global warming impact of CO 2. Capturing methane from landfills, wastewater treatment, and manure lagoons prevents the methane from being vented to the atmosphere. Carbon dioxide released while burning biomass is absorbed by the next crop growing. This is called a closed carbon cycle.

Acid rain is caused primarily by the release of sulphur and nitrogen oxides from the combustion of fuels. Acid rain has been implicated in the killing of lakes, as well as impacting humans and wildlife in other ways. Since biomass has no sulphur content, and easily mixes with coal, “co-firing” is a very simple way of reducing sulphur emissions and thus, reducing acid rain. Utilization of renewable forest biomass provides net benefits for forest health, the environment, the industry and local economies. The impact of biomass harvesting on soil quality and wildlife habitat are minimal, with no significant impacts on deadwood or soil compaction when it is harvested with responsible management practices. Biomass removals reduce wildfire hazard and severity, in addition to providing smoke management and carbon benefits. New markets for logging debris and poor quality trees can underwrite important projects to improve forest health and wildlife habitat, improving our environment

Operational impacts Operations activities that may cause environmental impacts include operation of the biomass energy facility, power generation, biofuel production, and associated maintenance activities. Typical activities during biomass facility operation include power generation or production of biofuels,

35 Options for Value-Added Processing of Coastal Forest Debris and associated maintenance activities that would require vehicular access and heavy equipment operation when components are being replaced. Biomass power plants require pollution control devices to reduce emissions from combustion and large cooling systems. Potential impacts from these activities are presented below, by the type of affected resource.

Operation of biomass facilities results in emissions of criteria air pollutants and hazardous air pollutants (HAPs). Components causing air pollutants include particulate matter, carbon monoxide, sulfur oxides, nitrogen oxides, lead, and volatile organic compounds (VOCs). HAPs are toxic chemicals, known or suspected to be carcinogens. Emissions from operation, when added to the natural background levels, must not cause or contribute to ambient pollution levels that exceed the ambient air quality standards. The use of Best Available Control Technology (BACT) would minimize the potential for adverse air quality impacts from biomass facilities.

Human Health and Safety Possible impacts to health and safety during operation include accidental injury or death to workers. Health impacts could result from exposures to chemicals and products used and produced in biomass facilities, air emissions, and noise. Dry dust produced from handling feedstock, such as soybeans, switchgrass, or wood chips, may be combustible. Explosion hazards can exist when the finest dust forms or settles.

All personnel involved with the operation should utilize appropriate safety equipment and be properly trained in required OSHA practices.

During drying and torrefaction of biomass, large amounts of non-condensable and condensable gases are released from biomass torrefying. Releasing these pollutants to air and environment could have an impact on human and environmental health. Most of the torrefaction plants combust tar produced by the torrefaction unit to produce heat for the system and also prevent releasing these compounds to the air or water. Torrefied biomass as a fuel, even in comparison to raw biomass and untreated wood pellets, produces less VOC’s because these materials have been removed partially during the torrefaction process.

3.1.17 Torrefaction Technology Sources & Characteristics

A variety of manufacturers and researchers are developing torrefaction units for commercial use. A few are described in this section to provide an overview of the manufacturers that are trying to enter the market. Because this industry is not completely developed and commercialized, it is difficult to make judgments about the manufacturer’s claims for their products. Worldwide there are many torrefaction initiatives in development, but the initiatives which are furthest along can be found in Europe and North America. Tables 3.5 and 3.6 provide an overview of these technologies as of the date of preparing this report. This is not by any means a complete overview because more initiatives pop up almost every day.

Table 3.5 European torrefaction developers* Developer Technology Production Tonnes/Yr Starting Topell Energy Torbed capacity(t/a) 60,000 operation Q4 2010 Stramproy green Oscillating belt 45,000 Q3 2010 4Energyinvestment Invest Unknownconveyor 38,000 Q4 2010 Torr-coal Rotary Drum 35,000 Q3 2010 Thermya Moving bed 20,000 2011 ECN Moving bed Unknown Unknown FoxCoal Screw Conveyor 35,000 2012 Bioenergy Rotary drum 25,000 2011 DevelopmentRotawave Micro-wave reactor 110,00030000 Q42012 2011

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Table 3.6 North American torrefaction developers* Developer Technology Production Tonnes/Yr Starting Integro Earth Fuels LLC TurboDryer capacity(t/a) 50,000 operation 2010 Agri-Tech Producers Belt reactor Unknown 2010 Torrefaction System inc. Unknown Unknown 2013 HM3 Unknown Zilkha Biomass Energy Unknown 40,000 Q4 2010 WPAC (CA) Unknown 35,000 2012 (?) *Source: Overview of International Developments in Torrefaction, CP Kleinschmidt, KEMS, Nederland, BV

3.1.18 Preferred Technologies (BBRG)

Based upon their knowledge and experience with technologies in this sector, researchers at the BBRG prefer the following configuration options :

• Turbo dryer (Wyssmont is versatile in many parameters especially those dealing with feedstock) • Rotary drum (rotary drum technology is a proven technology for heat treating biomass) • Moving bed (gravity). This is similar to a grain dryer. Easy to operate. • Modified steam treatment (similar to Zilkha) • For torrefying regular pellets a gravity flow moving bed is recommended.

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3.2 Sector Profile: Densification Technologies

3.2.1 Technology Development History

Pelletizaton technology originated from densifying feed to facilitate feeding livestock. The beginning of industrial scale production of animal feeds is traced back to the late 19th century, when the benefits of a balanced diet and prepared feed or food were realized. Pelletization helped to ration all nutrients in a small dense particle, similar to a kernel of grain. This packaged form of nutrients was easy to bag, store, handle and feed to animals with minimal wastage.

Research work on engineering aspects of compressed feeds first appeared in published literature in the mid 1950's. The number of publications increased in the 60's as interest in wafering and pelleting of forage for domestic feed market increased. A number of written texts were prepared by manufacturers of pelleting equipment. In the literature, compressed forage was called wafers or pellets. The term "cube" was used occasionally.

Compared to other fuels in use today, wood pellets, which were introduced in North America in the 1970s as an alternative fuel, can be considered a relatively new type of fuel. The primary purpose of wood pellets was to help resolve the energy crisis. In the beginning, they were used mainly by industrial, commercial and institutional sectors for heating. The first residential wood pellet stoves were sold to consumers in 1983. As of 2009, about 800,000 Americans were using wood pellets for heat. In 2011, North America had over 120 wood pellet manufacturers and produced about 3.5 million tons of pellets. Europe has more than 300 wood pellets manufacturers with production totaling 6,500,000 tons. Buhler claims to be the first manufacturer in Europe that produced industrial pellet mills to make pellets.

In Canada Pacific BioEnergy in Prince George is a Canadian pioneer in the manufacture of wood pellet fuel. Pacific BioEnergy was the first producer on North America's west coast to enter the overseas bulk commercial market. Today, Canada and specifically British Columbia produces wood pellets as a fuel replacement for coal in coal-fired electricity generation plants, under long-term supply contracts with leading international electric power producers.

3.2.2 Overview of densification

As a bulk, biomass pellets have a bulk density of 500-700 kg/m 3 similar to that of grains. The high density combined with flowing characteristics makes storage and handling of biomass safe and economical, especially for long distance transport. Pellets are easily fed to combustors and gasifiers. Ingredients in a pellet can be formulated to a required specification to enhance conversion efficiencies. For instance, wood pellets, which have a moisture content of about 5% and an ash content of less than 0.2%, represent a desired feedstock for efficient burners.

Figure 3.4 shows processing steps for turning a biomass into pellets. Normally, the incoming raw biomass is in a variety of forms, sizes, moisture contents, and is often mixed with impurities. The material is sorted, cleaned and stored at the plant site. The material may have to be cut into smaller pieces before storage. For production the biomass is passed through a dryer followed by grinding prior to pelletization. Pelletization may also include a steam conditioning step for biomass heating and moistening prior to the press mill.

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Figure 3.4 Processes involved in densification

The wood pelleting process involves drying, grinding, conditioning, pelleting or extrusion, cooling and screening of wood fiber to produce pellets. The raw fiber must be free of tramp materials such as stones, glass, metal and dirt. Failure to remove these foreign objects can result in equipment failure, poor die and roller life, product contamination and excessively high ash in the finished fuel. The raw fiber must be of the proper moisture content prior to pelleting. The range most commonly used is the 6% - 8% wet basis moisture content. The wood must be dried either in the kiln drying process of the lumber producers or by a rotary drum dryer to further dry the kiln dried, (KD), material.

3.2.3 Drying

Rotary drum dryers are the most common type of dryers used to adjust the moisture of the raw fiber. Rotary drum dryers come in two configurations: single pass and triple pass. The burners can be fired with natural gas, biomass or oil. As a general rule of thumb, one must double the cost of the equipment for a wood pelleting plant if a rotary drum dryer is required. For grass, the chop is then transported to the plant site and dumped onto the paved yard for high temperature drying. The dryers are typically 4.3 m diameter and 12 m long. The chipped or chopped material dries at temperatures of 200 to 900°C for approximately 3-10 minutes depending on the size of the drying material. Small particles have a few seconds residence time. Larger particles stay in the dryer for a few minutes. The dryer temperature is automatically controlled by the wetness of the feed biomass. The moisture content of the input chop may range from 15 to 75% or even higher. A rainfall on biomass could also boost the input moisture content to the dryer. The final moisture content of the biomass ranges from 7 to 9%. The typical capacity of the dryer is 5 to 10 t dry material per hour.

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Figure 3.5 a wood pellet plant

The rotary drum dryers have several unique characteristics: The chips and the drying air flow con- currently. This brings the heated drying air in contact with the highest moisture chops. The intense heat causes quick evaporation of moisture from green crop or small wood pieces within a few seconds of entering the dryer. The evaporative cooling keeps the particles cool and thus heat damage to the drying particles is kept at a minimum. The success of this process depends upon good mixing of hot gases with the material. Drum rotation and the flow of air help the flow of material in the dryer. The small particles (mostly leaves or saw dust and light shavings) become air borne and leave the drying chamber quickly. The heavier stems move slower and have a longer residence time in the chamber.

If biomass particles are not well dispersed upon entering the drying chamber, they will tend to char or burn. A single large capacity cyclone separates the dried biomass from the air stream upon exit from the drum. The system requires a large amount of airflow to convey the mass of chips or chops as well as adequate air speed for efficient solid recovery. This calls for expenditures of excessive power and energy. The cyclone is not capable of recovering very small particles, which are eventually lost to the environment. The pneumatic movement of the dried forage causes further breakage of the wood chips to smaller particles as the biomass particles hit solid surfaces numerous times. Particle breakage might be beneficial in a pelleting process but would be detrimental to cubing and briquetting, where longer fibers are desired.

The existing drum dryers in Canada exhaust the moisture-loaded air into the environment. Much of the sensible and latent heat in the air can be recovered by recycling air back to the dryer and/or using the exhausted air in pre-drying of high moisture forage. Roch (1989) discusses several improvements that would enhance the unique characteristics of rotary drum dryers. The proposed design improvements are listed as follows. The gas is burned with the exact quantity of fresh air needed in a separate firebox and then delivered to the dryer. The combustion chamber is kept at a distance away from the drum and a special feature ensures complete mix of fresh drying air and hot gases. The temperature of the drying air is controlled by the moisture content of the fresh crop, reducing the risk of burning the leaves.

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To improve the efficiency of the dryer, the exhausted air is recycled to the drum for energy conservation. The drum has re-designed baffles for a better dispersion of biomass in the drum. The moisture content of the dried material is kept high (17-20%) before pelleting or cubing. The final drying is done on the final products (pellets or cubes). A settling chamber at the end of the drying chamber removes most of the larger particles by gravity. A number of high-pressure efficient cyclones remove smaller particles.

The heart of the process control for quality and efficiency is the drying system, which consists of loading moist chops to the drum, drum dryer, and cyclone separator. Sensors placed along the process line measure the following parameters: weight of fresh forage entering the drying chamber – feed rate, speed of the rotating drum, air temperature at the exit point, moisture content of biomass at the cyclone exit. The signals from the sensors are used to regulate the following process parameters: feed rate to the dryer, speed of the drum, fuel flow to the dryer. The result is stable operation of the drying process, producing constant moisture content chops, with the least damage to the product.

3.2.4 Size Reduction

Biomass comes from a variety of sources such as forest, agriculture, industrial and municipal wastes. Size reduction (grinding) is one of the major pre-processing operations for using biomass as a source of energy or for producing pulp for paper industries. Grinders are among the largest power consuming machinery (Stocks et al., 1987), consuming 10-50 kW.t -1 depending on the material and grinding mechanisms (shear, impact, attrition) (Spinelli et al., 2001). The design and choice of the grinder are important for reducing the energy input in preparing biomass. In a pelleting plant with a throughput of 3-5 tonne/h the grinder is the second largest power user (111.9 kW) after the pellet mill. The grinder is also the second most expensive piece of equipment (Smith, 2004).

Processes such as gasification, pyrolysis, and hydrolysis/fermentation convert biomass to energy. None of these processes can use biomass in its original form. The first step in preparing biomass as a feedstock is size reduction. Size reduction is important because it is the main consumer of energy in the preparation process of biomass. Each downstream unit operation needs a specific average size of particles and particle size distribution. The specific particle sizes needed for some of the conversion processes are summarized below.

Hammer mills and Hogs grind material by the impact of a high-speed rotary hammer. Hammer mills are either tangential-feed or axial-feed types, according to their structure. The mill comprises a feeding system, a grinding chamber and a collector. The feeding system comprises a feed hopper and a feed control flap. The grinding chamber consists of a rotary disk, a hammer, a serrated plate and a screen. The major parts of the collector include a fan, a feed conveying tube and a collection hopper.

Fed from the feed hopper in a tangential direction, the material is impacted and driven to the grinding chamber by the rotating hammers with high speed. The process inside the grinding chamber includes the functions of impacting, shearing and kneading, which improves the efficiency of grinding. Contaminants in forest residues (e.g. sand and stones) cause the sharp blades and knifes to blunt. Hammer mills avoid this problem by using blunt tools such as hammers. Figure 3.6 shows the working principle of a hammer mill hog. The final size of the grind can be controlled by built-in screens on the bottom.

Hammer mills are run at a rotor speed two or three times faster than typical hog applications. They are used for making fine particles. Hogs have a 1200 rpm limit and most of them run in 700-900 rpm range (CWC, 1997). Hammers in hammer mills and hammer hogs can be fixed hammers or swing hammers. The swing hammers can accept more contaminated feed and they are easier to maintain in comparison with fixed hammers.

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Tub grinders are basically hammer mills with a large tub designed to receive the bulk (woody) material. Material is fed into a large rotating tub where it falls by way of gravity. The spinning action of the tub forces it into a rectangular opening and finally into the path of swing hammers attached to a high speed rotor. The hammers pass over a series of screens or fixed anvils of various openings which control the final particle size. The processed material is then discharged via a belt conveyor or blower into vans or onto the ground. Models which are not equipped with their own loader are usually fed with a front end loader or a boom mounted grapple. Tub grinders are capable of processing a variety of products ranging from demolition waste, plastics, grass and leaves, pallets, railway ties to branches, tops and portions of whole trees. The physical size and the material to be processed are the prime factor affecting its performance. Among other factors, moisture content and presence of foreign objects are important. The grinder energy required to process materials decreases as the moisture content decreases.

The raw material must be finely ground prior to being pelleted. The final grind hammer mill is typically capable of handling product which is about the size of a U.S. quarter coin. If some or all of the product is much larger, a primary grind hog is required to reduce the material to a size that the final grind hammer mill can handle. Some producers prefer to do their primary grind prior to the dryer to expose more surface area per pound of material to the hot gases in the dryer and to generate a more even particle size of the material to be dried. However, the horsepower requirements for grinding “wet” wood fiber are much higher than the relatively dry 10% material after the dryer. To grind before or after the dryer is the individual decision of each plant.

Figure 3.6 Hammer mill

3.2.5 Pelleting and Extrusion

Pelleting and extrusion are densification processes used to produce small, dense cylinders from loose aggregate particulate matter. This type of densification process is typically employed in order to improve bulk handling characteristics, such as flowability and bulk density of the material being processed. The pelleting process involves the drying, grinding, conditioning, pelleting or extrusion, cooling and screening of loose particulate matter to produce pellets. A pellet mill consists of a perforated steel die and one or two rollers. The die and/or the rollers are rotated and the feedstock is forced through the perforations to form densified pellets. Pellets produced usually range in size from 4.8 – 19.1 mm in diameter and 12.7 - 25.4 mm in length. Extrusion is a similar operation where raw material is compressed by a screw or piston through a die to form compact cylinders or other shapes. In general, a pellet mill is used to produce pellets from fibrous material, such as wood, wood waste and agricultural products.

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Figure 3.7 shows a schematic diagram of typical pelleting unit, consisting of a series of circular die and roll assemblies. When the ground biomass is introduced into the housing where internal rollers press the material against the die opening, the material is densified and extruded through the die holes in a step- wise fashion. Usually the materials are ground into required particle size and steam conditioned to 60 to 82 oC prior to pelleting. A knife attached to the outside housing cuts the extruded material to the required length (Sitkei, 1986; Sokhansanj et al., 1993; Tabil, 1996).

Pelleting is advantageous because of continuous production, high performance in throughput, the possibility of compacting products of natural moisture content, simple process control, the possibility of automation, and a balanced cost/profit ratio (Wetzel, 1985; Eriksson and Prior, 1990). Since pelleting is an extrusion process, more energy is generated by frictional forces developed between the metal surface and the material, so more energy is required to produce pellets.

Figure 3.7. A pellet mill showing external ring, die holes, and internal press wheels.

The ratio of length to diameter (L/D) for these dies varies from 8 to 12, but is most commonly 10. Typical pressures in these dies have been recorded at about 35 MPa (Sokhansanj and Wood, 1991). The pellet temperature, at exit, is measured at about 90°C. Upon exit from the pellet mill, the pellets are hot and soft.

The pellets are cooled in single or double pass band coolers. The residence time in the cooler is 15 to 30 minutes. The pellets lose about 1.5 to 2 percentage points of moisture in the cooler, where the temperature of the pellet is cooled to within 5°C of the ambient temperature. The cooled pellets are conveyed from the cooler to storage areas using mechanical or pneumatic conveying systems. In some processing plants, pellets are passed over a screen to remove fines, and weighed before storing.

3.2.6 Equipment Configurations & Costs

Costs will vary by system configuration and by supplier. The following table provides budget level costs for an integrated 4 – 6 Tonne/Hour system manufactured by Bliss Industries, a leading supplier to the industry.

Table 3.7 - Budgetary Cost 4-6 TPH Bliss Industries, Inc. Ponca City, OK 1) Raw Material Infeed Bin $28,000.00 2) Raw Material Transfer Conveyor & VFD 9,000.00 3) Suspended Magnet 2,000.00 4) Hammer Mill 53,000.00

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5) Pneumatic System (Hammer mill take-away) 35,000.00 6) Mixing/Live Bottom Pellet Mill Surge Bin 36,000.00 7) Bindicators for Surge Bin 600.00 8) Pellet Mill, Conditioner & Motors $209,000.00 9) Dies for Pellet Mill $6,000.00 10) Spare Rollers for Pellet Mill $15,000.00 11) Counter Flow Cooler $27,000.00 12) Cooler Air System $16,000.00 13) Drag Conveyor for Cooler $6,000.00 14) Bucket Elevator for Cooler Discharge $17,000.00 15) Pellet Screener $20,000.00 16) Bagging Bin $8,000.00 17) Bagging Bin Bindicators 600.00 18) Bagging Scale $13,000.00 19) Bag Hot Air Sealer $12,000.00 20) Bagging Conveyor $6,000.00 21) Structural Steel $85,000.00 22) Electrical Service & Controls $75,000.00 23) Engineering $35,000.00 24) Boiler & Hardware $25,000.00 25) Miscellaneous Spare Parts $25,000.00 Budget $764,200.00

Other Cost Considerations: 26) Front End Loader 27) Fork Lift 28) Buildings 29) Site & Driveway Work 30) Fire Protection System 31) Bulk Storage Bins 32) Bags, Slip-Covers & Pallets 33) Start-up Costs 34) Operating Capital 35) Rotary Drum Dryer (if needed)

3.2.7 Products/Outputs Characteristics

Loose dried biomass has a light weight. It needs to be densified for ease of handling and transportation. The densified forms of cellulosic materials are pellets, cubes, briquettes and compacted small and large bales. This report focuses on densified flowable forms of biomass. Pellets, cubes, and small size briquettes (pucks) fall in this category. Figure 3.8 shows different forms of densified biomass and the type of mills used to produce these materials. This figure shows that as the bulk density increases the cost of producing densified biomass increases.

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Pellet mill Granulator Briquetter Cost perdry ($ ton)

20 30 35 45 Density (lb per cu ft)

Figure 3.8 Alternate technology for biomass densification Pellets Pellets are usually in the form of a hardened biomass cylinder, 4.8 mm to 19.1 mm in diameter, with a length of 12.7 to 25.4 mm. Most pellets are made by extruding finely ground biomass through round, or occasionally square, cross sectional dies. The unit density of pellets is in the order of 961 to 1200 kg/m 3. The bulk density may be as high as 750 kg/m 3. Cubes Cubes are larger sized pellets, usually in the form of a square cross section of chopped grasses or other biomass. Cube sizes range from 12.7 to 38.1 mm in cross section. The length of a cube is usually equal to or longer than (25 to 100 mm) the dimensions of the cross section. Cubes are less dense than pellets (641 to 801 kg/m 3).

Briquettes

Briquettes are similar to pellets but differ in size. Briquettes have a diameter larger than 38 mm (1.5 in.) and are formed when biomass is punched, using a piston press, into a die under high pressure. Alternatively, a screw extrusion can be used in which the biomass is forced through a heated die. Biomass densified through screw extrusion has higher storability and energy density properties compared to biomass produced by piston press. There are basically two types of briquetters, hydraulic types with hydraulic pumps and mechanical types. The major problem identified for the briquetting technology is the life of the screw. Usually the screw wears out within 3-4 hours and becomes unusable. The wear rate of the screw surface and flights are dependent upon its material of construction. Repairing of the screw causes interruption in the work and also one screw can not be repaired more than 10 times. Therefore, the cost of screw and its repair is one of the major barriers to further dissemination of briquetting technology. When briquettes are cut to smaller pieces they are called pucks.

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The density and durability of densified biomass are influenced by the natural binding agents of the material. The binding capacity increases with a higher protein and starch content. Corn stalks have high binding properties, while warm-season grasses, which are low in protein and starch content, have lower binding properties. Binding agents may be added to the material to increase binding properties. Commonly used binders include vegetable oil, clay, starch, cooking oil or wax. The addition of steam prior to densification can aid in the release and activation of natural binders present in the biomass.

Granulation

Granulation and agglomeration are the terms generally used to describe the process of particle formation or size enlargement. Granulation can be defined as a process of producing an optimum-sized, nearly spherical product from fines, melts or slurries. The agglomeration or moist particulate solids into nearly spherical pellets by tumbling, rolling, or some other systematic agitation of the mass is called “granulation” in the fertilizer industry and “balling” or “wet / green pelletization” in the iron ore industry.

In general, granulation, balling, pelletization, and agglomeration are used interchangeably, and the spheroidal ensemble of particles is called a granule a granule, ball, pellet, or agglomerate. However, the defined shape, smooth surface and small particle size distribution distinguish pellets from conventional agglomerates or granules. Conventional granules usually have an irregular shape, a rough surface and a broader particle size distribution. Granulation and related processes cover a wide range of techniques used to form agglomerates that range in size from approximately 100 µm to 20 mm in which the original particles can still be identified.

Fire logs

There are a number of types of manufactured fire logs available today. Wood pressed logs have been more readily available in Western states because of the large quantity of sawdust from sawmill operations. The manufactured firelog was created in the 1960’s as a way to dispose of waste sawdust. Manufactured firelogs combine two industrial byproducts, sawdust and petroleum wax, which are mixed and extruded into familiar log like shapes. Manufactured firelogs are generally individually wrapped with paper and require no kindling or starting material. Firelogs are easy to light and perform much like a candle with the sawdust particles serving as the wick, and the wax as the fuel. The result is a longer, more consistent burn than cord wood that almost fully consumes the firelog, leaving little ash to clean up after the firelog is finished burning. Their ease of use, physical cleanliness, attractive flame, and good quality fire have made their use in fireplaces very popular, creating an annual national demand of approximately 90 million logs. The Oregon Department of Energy indicates that firelogs are a cleaner source of fireplace fuel than natural cord wood. These tests found that firelogs produced 69% less particulate matter, 88% less carbon monoxide, and 50% less opacity (visible smoke). Tests indicate that firelogs produce 78% less creosote accumulation in chimneys than natural wood. Creosote build up is the leading cause of chimney fires.

3.2.8 Densification Equipment Variations

Basically, densification techniques can be classified into two broad categories based on the operating conditions: a) hot and high-pressure densification; b) cold and low-pressure densification (Bhattacharya et al. 1989; 1996). Depending on the type of equipment used, hot and high-pressure densification can be categorized into four main types: (a) piston press densification, (b) mechanical press,(c) hydraulic press, (c) screw press including conical screw press, screw press with heated die, twin screw press, roll press densification. A short description of these equipment configurations follows.

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Piston press

The high compaction process or binderless technology consists of the piston press and the screw press. A reciprocating type piston press where the biomass is pressed in a die by a reciprocating ram at a very high pressure is shown in Figure 3.9. Pietsch (1997) described the compaction process of a ram/piston press. The reciprocating motion is produced by an eccentric drive or flywheel symbolized by the circular representation on the right. Force exerted by a piston reaches a level that is sufficient to overcome the friction of all briquettes in the pressing channel and the backpressure caused by series of briquettes in the cooling channel. At the beginning of the backstroke, the ram face does not separate at first from the briquette because of considerable elastic expansion of the briquette. It is important, however, to note that the surface produced by the ram face is so highly densified that during the next stroke it acts as a bottom of a densification chamber until friction is overcome and the product moves forward. During the entire production sequence, the surfaces of adjacent briquettes do not develop significant bonding, therefore, the product will separate into single briquettes.

Figure 3.9 Cross section of a reciprocating high pressure briquetter

A hydraulic piston press is different from the mechanical piston press in that the energy to the piston is transmitted from an electric motor via a high-pressure hydraulic oil system. This machine is compact and light. The briquettes produced have a bulk density lower than 1,000 kg/m 3 because pressure is limited to 392 to 1,324 Pa. This machine tolerates higher moisture content than the usually accepted 15% moisture for mechanical piston presses (Grover and Mishra, 1996).

Screw press

In a screw extruder press (Figure 3.10), biomass is extruded continuously by a screw through a heated taper die. Although power consumption of the screw press type is high, it produces better quality briquettes. The central hole incorporated into the briquettes produced by a screw extruder helps to achieve uniform and efficient combustion and also the briquettes can be carbonized. In a conical screw press, biomass is compressed by a conical screw as shown in Figure 3.24. The screw forces the material into the compression chamber. A rotating die head extrudes the material through a perforated matrix to produce

47 Options for Value-Added Processing of Coastal Forest Debris briquettes of diameter about 2.5 cm. A knife cuts the densified product to a specified length. In a screw press with heated die, the material is forced by a screw, having no taper or a small taper through a die heated electrically from outside. The die has a number of ridges, which serve to prevent the densified material from rotating with the screw. The die temperature is normally maintained at about 300 oC. The raw material gets heated up to about 200 oC during the process, most of the heating being caused by friction. In the twin screw press, two adjacent gripping shafts fitted with screw parts with varying leads, rotate closely and opposed to each other in an “8” shaped casting. Due to high pressure and friction, the temperature of the raw material could rise up to 25oC. (Bhattacharya et al., 1996).

Figure 3.10 Conical Screw Press (Eriksson and Prior, 1990).

Roll press

A roll press compactor (Figure. 3.11) is used to compress the biomass without any preheating system. A roll press provides a means of generating extremely high pressures on granular solids. These pressures either break particles or agglomerate particles into a sheet or into individual briquettes (Johanson 1996). Between smooth, fluted, corrugated or waffled rollers, the material is compacted into dense sheets. If rows of identical pockets are machined into the working surface and the rollers are timed such that the pocket halves exactly match, the so-called briquettes are formed. Roller presses do not produce compacts with the same fine detail and uniformity as those made by tabletting machines or other die presses. The flashing or web, caused by the land areas around each briquette pocket, which is usually found on the edges of all briquettes from roller presses cannot be removed completely and therefore may also be objectionable. Because of these characteristics, roller presses find their natural field of application where relatively low investment and operating costs are more important than the absolute uniformity of the product (Pietsch, 1976; Pietsch, 1997).

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Figure 3.11 Roll Press Compactor.

Dec and Komarek (1992) investigated the compaction process of granular materials in roll presses with smooth and pocketed rolls. They developed a significant correlation between pressure distribution in the roll nip and the mechanical properties of compacted material. They also concluded that in order to obtain the best possible compact during roll pressing, it is necessary to accurately predict material behavior between the rolls. An understanding of how the material will deform and how the stress will distribute in the nip region is essential to proper design of equipment and optimum control of the compaction process. However, there is still a need for more fundamental analysis based on theoretical models dealing with three-dimensional deformation and stress distribution. Roll presses are used for briquetting many mineral and metal powders, and coal easily with little modifications in the roll shape and corrugations depending on the requirement of final product (Weggel 1983).

3.2.9 Effect of Process Variables on Densification Process

During densification of biomass, it is important to know the feed properties and the condition of feed. In order to understand the suitability of biomass for densification, it is essential to know the physical and chemical properties of biomass, which also influence its behavior as a fuel. These process variables determine the density, stability and durability of the product in most cases. Physical properties of interest include moisture content, particle size, bulk density, void volume and thermal properties. Chemical characteristics of importance include the proximate and ultimate analysis, and higher heating value. The physical properties are most important in any description of the binding mechanisms of biomass densification apart from the chemical composition of the specific biomass (Kenney et al., 1990).

3.2.10 Challenges in Densification of Biomass

Canada at one point in 1990’s produced more than 1.5 million tonnes of alfalfa pellets and cubes for animal feeding and export. The industry has now been virtually wiped out because of the cost of natural gas and intense competition from other feedstock sources. Fortunately a new pelletization industry is emerging in Canada to meet the international demand in biofuels. Canada, mainly BC, produced and exported roughly 2 million tonnes of wood pellets in 2011. The demand for Canadian wood pellets is increasing, especially in Europe. The domestic market for wood and other biomass pellets especially for greenhouse heating is also developing. The survival and growth of the wood pellet industry depends to a large extent upon solving a number of technology challenges. A short list of main concerns is as follows. a. The cost of turning raw biomass into pellets is high, making pellets less competitive with fossil fuels. b. The energy input and output ratio of the process is not favourable, causing environmental concerns.

49 Options for Value-Added Processing of Coastal Forest Debris c. The availability of low cost saw mill residue is decreasing due to a gradual reduction in the number of sawmills especially in BC. Logging residues are varied in quality resulting in poor pellets. d. The excessive transport cost needs to be offset by a higher bulk density, higher energy density and higher pellet durability. e. Pellets emit toxic gasses inside enclosed spaces that endanger the life and health of people.

3.2.11 Technology Sources & Characteristics – Pelleting Systems

The top leaders in providing pellet equipment are listed in Table 3.8.

Table 3.8 Andritz Sprout http://dev.andritzsproutbauer.com/pellet-mills.asp Bliss Industries http://www.bliss-industries.com/about-us CPM & Roskamp Champion http://www.cpm.net/ AMANDUS KAHL GmbH & Co. KG http://www.lcicorp.com/granulation/Docs/Kahl_Pellet_Press.pdf Buhler AG http://www.buhlergroup.com/global/en/products.htm

3.2.12 Non-Conventional Densification Technologies – Developers/Suppliers

Key suppliers of non-conventional densification systems include Nielsen (briquetting systems), RUF (briquetting systems) and Warren & Baerg (cubing systems).

3.2.13 Issues with Densification of Torrefied Feedstock

A partial list of issues pertaining to densification of torrefied biomass includes the following: • All tested pelleting characteristics were affected by torrefaction temperature. • Cohesiveness property played an important role in compressibility, specific energy required in compression, and initial density of pellets. • Torrefied wood, with less cohesiveness characteristics, had a poor compressibility compared to the parent wood, and therefore resulted in higher energy needed to compression and results in lower pellet initial density. • Regardless of the low compressibility of torrefied wood, its bonding ability was strong and believed to be attributed to the higher lignin percentage in torrefied products. This resulted in high performance in relaxation behaviors, tensile strength, durability, and water resistance of torrefied wood pellets. • Fluidization behavior may be superior in torrefied powders; however, in term of compaction characteristics, torrefied wood was found not to be ideal feedstock for densification. • Adjusting pelleting methods and the application of foreign binders may improve pelleting performance and make combinations of densification and torrefaction more feasible. • Better understanding of the combination of torrefaction and densification will allow for the production of a high pellet quality, thus improving the feasibility of exploitation of forest residues into bio-based products.

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• Particle size (distribution) of the input fuel is critical for all reactor technologies and strongly influences the product quality. • All torrefaction processes produce a certain tar fraction. • Direct heating leads to more efficient heat/ mass transfer and indirect heating increases the risk of carbonization and product loss (runaway). • Fire and explosion risk are problems with handling dust. • High reactivity of torrefied material, especially in powder form. • High risk during milling, handling, overloading and pelletizing. • Most torrefaction suppliers use additives (lignin, glycerin, moisture). • Pellet mill producers indicate that pelletization is challenging. • Pre-treatment cost is an issue. • Torrefaction demands homogeneous feed stream (milling and screening). • Fluctuations in feed strongly influence product quality. • Possible odour of torrefied product (especially with steam treated). Could be toxic concentrations. • PAHs can condensate on product. • Specifications of torrefied biomass still varying, Calorific value, Carbon content, Volatiles, Milling behavior. • Certification of the Sustainability of torrefied biomass; no study yet

• CO 2 efficiency over the value chain, GHG calculation.

• Future CO 2 caps for coal fired plants will prevent co-firing of fuels which are only partly biogenic.

3.2.14 References

See Appendix 1

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3.3 Sector Profile: Pyrolysis Technologies

3.3.1 Biomass Conversion Processes and Fundamentals

Biomass can be converted into useful biofuels and biochemicals via biomass upgrading and biorefinery technologies. Biomass conversion processes include fractionation, densification (briquetting, pelleting), liquefaction, supercritical fluid liquefaction, destructive carbonization, pyrolysis, gasification, hydrothermal liquefaction and hydrothermal upgrading, Fischer–Tropsch synthesis, anaerobic digestion, hydrolysis, and fermentation. Figure 3.12 shows the main biomass conversion processes.

Figure 3.12 Main biomass conversion processes [Demirbas, 2010].

The three ways to use biomass are: (1) burning it to produce heat and electricity, (2) converting it to gas- like fuels such as methane, hydrogen and carbon monoxide, and (3) converting it to a liquid fuel. The products and applications of these thermal conversion processes are summarized in Figure 3.13 and Table 3.9.

Figure 3.13 Products from thermal biomass conversion [Czernik & Bridgwater, 2004].

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Table 3.9 Comparison of four major thermochemical conversion processes [Basu, 2010].

3.3.2 Pyrolysis

Pyrolysis can convert biomass to a liquid fuel. Pyrolysis produces energy fuels with high fuel-to-feed ratios, making it the most efficient process for biomass conversion and the method most capable of competing with and eventually replacing non-renewable fossil fuel resources. Biomass is heated in the absence of oxygen, or partially combusted in a limited oxygen supply, to produce a hydrocarbon-rich gas mixture, an oil-like liquid and a carbon-rich solid residue. Rapid heating and rapid quenching produce the intermediate pyrolysis liquid products, which condense before further reactions break down higher molecular weight species into gaseous products. High reaction rates minimize char formation. Under some conditions, no char is formed. At higher fast pyrolysis temperatures, the major product is gas. Pyrolysis can also be carried out in the presence of a small quantity of oxygen (gasification), water (steam gasification) or hydrogen (hydrogenation).

Unlike combustion, pyrolysis takes place in the total absence of oxygen, except in cases where partial combustion is allowed to provide the thermal energy needed for this process. Pyrolysis is a thermal decomposition of the biomass into gas, liquid, and solid. It has three variations: • Torrefaction, (also called “mild pyrolysis” or “carbonization”) • Slow pyrolysis • Fast pyrolysis

Fast pyrolysis produces mainly liquid fuel, known as bio-oil; slow pyrolysis produces some gas and solid charcoal (one of the most ancient fuels, used for heating and metal extraction before the discovery of coal). Pyrolysis is promising for conversion of waste biomass into useful liquid fuels. Unlike combustion, it is not exothermic [Basu, 2010].

Fast pyrolysis occurs in a time of few seconds or less. Therefore, not only chemical reaction kinetics but also heat and mass transfer processes, as well as phase transition phenomena, play important roles. The critical issue is to bring the reacting biomass particle to the optimum process temperature and minimize its exposure to the intermediate (lower) temperatures that favor formation of charcoal. One way this objective can be achieved is by using small particles [Czernik & Bridgwater, 2004].

Torrefaction, which is currently being considered for effective biomass utilization, is also a form of pyrolysis. In this process the biomass is heated to 230 to 300 °C without contact with oxygen. The chemical structure of the wood is altered, which produces carbon dioxide, carbon monoxide, water, acetic acid, and methanol. Torrefaction increases the energy density of the biomass. It also greatly reduces its weight as well as its hygroscopic nature, thus enhancing the commercial use of wood for energy production by reducing its transportation cost [Basu, 2010]. Table 3.10 shows the typical product yields (dry wood basis) obtained by different modes of pyrolysis of wood.

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Table 3.10 Typical product yields (dry wood basis) obtained by different modes of pyrolysis of wood [Basu, 2010].

As mentioned in Table 3.10, three types of primary fuel are produced from biomass [Basu, 2010]: • Liquid (ethanol, biodiesel, methanol, vegetable oil, and pyrolysis oil)

• Gaseous (biogas (CH 4, CO 2), producer gas (CO, H 2, CH 4, CO 2, H 2),

• Syngas (CO, H 2), substitute natural gas (CH 4) • Solid (charcoal, torrefied biomass)

From these come four major categories of product: • Chemicals such as methanol, fertilizer, and synthetic fiber • Energy such as heat • Electricity • Transportation fuel such as gasoline and diesel In this report, however, we will focus on production of pyrolysis oil from biomass conversion.

3.3.3 Pyrolysis Oil

Pyrolysis oil is a dark brown, free flowing liquid produced from fast pyrolysis of plant material. Fast pyrolysis is a process carried out at atmospheric pressure by which small biomass particles are heated in the absence of oxygen, vaporized, and condensed into liquid. It occurs by rapid heat transfer to the surface of the biomass particle (500 oC), subsequent heat penetration into the particle by conduction, followed by rapid cooling. The residence time of the reaction is approximately one second. For efficient heat transfer through the biomass particle to occur a particle size of approximately 5 mm is required [Jones et al., 2009; Ringer et al., 2006; Venderbosch & Prins, 2010]. Pyrolysis densifies the biomass feedstock to reduce storage space and transport costs. The process typically yields 65-70 wt% liquid pyrolysis oil (on a dry feed basis), 15-20 wt% char, and non-condensable gases [Bradley, 2006; Jones et al., 2009; Ringer et al., 2006]. However, the product yields depend on the process temperature, residence time, feedstock type, and feedstock pre-treatment. Overall, the produced char can be combusted for energy production, upgraded to activated carbon, or used as a slow release fertilizer [Venderbosch & Prins, 2010]. The HHV of pyrolysis oil is approximately 16–19 MJ/kg. In contrast, a heavy fuel oil typically has an oxygen content of ~1 wt% and HHV of 40 MJ/kg [Czernik & Bridgwater, 2004].

The produced pyrolysis oil is different than petroleum because it contains approximately 25 wt% water and 50 wt% oxygen (on a wet basis) [Venderbosch & Prins, 2010]. Therefore, it is not a homogenous liquid nor does it readily mix with petroleum. If pyrolysis oil is left standing for long periods of time the lignin in the oil will precipitate [Bradley, 2006]. However, pyrolysis oils can be stored, pumped, and

54 Options for Value-Added Processing of Coastal Forest Debris transported in a similar manner to petroleum. Pyrolysis oils typically have a pour point of -30 oC. They can be stored below freezing, but will become very viscous and difficult to pump or transport. Similar to Bunker “C” oil, pyrolysis oils can be heated prior to use in order to facilitate flow. Some oils experience single phase separation during long storage periods. In turn, they must be mixed prior to use. Addition of alcohol stabilizes the phase separation. Glycerin from biodiesel, ethanol, and methanol have been successfully used as additives [Bradley, 2006]. Pyrolysis oil transportation has an advantage over fossil fuels, as fossil fuels tend to spread over water causing major environmental consequences. Pyrolysis oil does not spread, but separates into a heavy inert organic fraction that will sink and an aqueous phase that is diluted and bio-degradable in the event of a spill [Blin, 2007].

Pyrolysis oils can be combusted directly in boilers, gas turbines, and slow to medium speed diesels for heat and power. They have approximately 55% the heating value of diesel on a volumetric basis and 45% on a weight basis. Pyrolysis oils are an effective substitute for diesel, heavy fuel oil, light fuel oil or natural gas in pulp mill lime kilns, sawmill dry kilns, stationary diesel engines, industrial, commercial, and residential boilers. Pyrolysis oils can also be co-fired in coal and petroleum plants [Bradley, 2006; Venderbosch & Prins, 2010]. The simplest use of pyrolysis oil as a transportation fuel is in combination with a diesel fuel. Although pyrolysis oils are not miscible with hydrocarbons, the aid of a surfactant can improve emulsification with a diesel fuel [Czernik & Bridgwater, 2004].

Pyrolysis oils are very polar due to the presence of oxygenated compounds and have a pH of approximately 2-3 compared to diesel with a pH of 5, making them acidic. Therefore, due to their acidic and corrosive nature, enhancements are required for storage and transportation. Storage vessels and piping should be Stainless 304, PVC, Teflon, or a like substance [Bradley, 2006].

Pyrolysis oils are CO 2 neutral, contain no sulfur, and produce half the NO X emissions compared to fossil fuel [Venderbosch & Prins, 2010].

3.3.4 Analysis of Comminution & Beneficiation Requirements & Options

To achieve high pyrolysis oil yields from fast pyrolysis the solid biomass feedstock must facilitate the required heat transfer rates. This is done by having relatively small biomass particles with high surface area per unit volume of particle. In turn the particles reach the desired pyrolysis temperature in a very short residence time. Another reason for small particles is the physical transition of biomass during pyrolysis as char develops at the surface. Char has insulating properties that impede the transfer of heat into the center of the biomass particle. The smaller the particle the less of an affect char has on heat transfer [Ringer et al., 2006]. Comminution (size reduction) of biomass however requires energy, and this in turn adds to the overall processing cost of pyrolysis. Overall, the smaller the desired size the more expensive the cost for feedstock preparation, for example grinding costs can add up to $11/MT of biomass [Sokhansanj et al., 2006]. A common assumption is that 50 kWh of energy is required per ton of ground biomass [BioMatNet FAIR, 1997-2000]. This model by Mani et al. (2004) correlates the grinder screen size to the energy requirement for a hammer mill based on various types of biomass. According to their model, the energy consumption for grinding biomass from a mean chop size of 7.15 mm to between 3.5 and 0.5 mm is approximated by the following equation [Wright et al., 2010]:

Energy [kWh * ton -1] = 5.31 * size2 – 30.86 * size + 55.45 Eq. (1)

Moisture in the biomass is another feedstock preparation consideration. Any moisture present in the feed will vaporize and re-condense with the bio-oil product. If bone-dry biomass is subjected to fast pyrolysis the resulting bio-oil will still contain 12-15 wt% water. This is thought to be a result of dehydration of carbohydrates and other chemical reactions [Ringer et al., 2006]. Therefore, moisture in the feedstock

55 Options for Value-Added Processing of Coastal Forest Debris biomass will add to this base amount of water in the final pyrolysis oil product. Moisture in the feed is undesirable because it consumes process heat and contributes to lower product yields. Ideally it would be desirable to have little or no moisture in the starting biomass feed but practical considerations make this unrealistic. However, for reasonable pyrolysis performance, moisture content of less than 7% is recommended [Bridgwater et al., 2003]. Biomass drying typically requires about 50% more energy than the theoretical minimum of 2,442 kJ/kg of moisture evaporated [Brown, 2003]. Since feedstock cost is a primary driver in the cost of producing pyrolysis oils, it is important to keep these feed preparation costs associated with size and moisture low [Wright et al., 2010].

3.3.5 Pyrolysis Systems – Alternative Approaches

Alternative technology approaches include: • Ablative Pyrolysis • Fluid Bed Pyrolysis • Circulating Fluid Bed (CFB) Pyrolysis • Biomass Vacuum Pyrolysis • Heated Auger Systems • Rotating Cone Reactor (RCR) Pyrolysis

A detailed examination of each approach is beyond the scope of this study.

3.3.6 Distillation/Refining of Bio-Oil

Pyrolysis oil properties can be improved by oxygen removal in the form of moisture. This increases the heating value, decreases the acidity, and improves the pyrolysis oil stability. In literature, water removal from pyrolysis oil has been attempted by (a) distillation, (b) dehydration, (c) solvent extraction, and (d) hydrodeoxygenation.

(a) Pyrolysis oils are heat sensitive and subject to repolymerization, so they cannot be fractionated by distillation [Sheu & Rayford, 1988].

(b) Previously water removal from pyrolysis oil via dehydrated Na 2SO 4 was attempted with a ratio of Na 2SO 4 to pyrolysis oil of 3:1. This method only partially removed the water from pyrolysis oil and the ultimate analysis of treated pyrolysis oil showed high sulphur (1.6%) content from the Na 2SO 4 source. This in turn is undesirable due to the generation of SO x upon pyrolysis oil combustion. [Rout et al., 2009].

(c) Pyrolysis oil solvent extraction is a simple process. When an excess of water is added to pyrolysis oil, two layers form. The top layer is an aqueous fraction where the highly polar compounds of pyrolysis oil (acid, esters, etc) settle. The bottom layer is the viscous organic oil fraction containing approximately 2% water. A study by Mercader et al. (2011) found that pyrolysis oil containing 25% moisture can be dehydrated to 16% moisture with the addition of 2:1 oil:water weight ratio.

Additionally, another study by Jacobson (2011) investigated solvent extraction of pyrolysis oil using ethanol, chloroform, and benzene. The pyrolysis oil (50mL) was extracted separately with 50mL of solvent. The objective of extraction was to remove water and shift the chemical composition of the pyrolysis oil to one with lower oxygen content. Chloroform produced the

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highest yield of aqueous effluent, 24.0%, in comparison to yields from ethanol, 13.5%, and benzene, 10.9%. Chloroform was successful in producing the most desirable composition (a hydrocarbon mixture with lower overall oxygen content). Furthermore, the calorific value of the chloroform extract was significantly higher at 44.0 MJ/kg compared to the raw pyrolysis oil at 21.6 MJ/kg as seen in Table 3.11. This is comparable to the heating value of gasoline, which is also 42 ‐46 MJ/kg. However, residual chlorine in the pyrolysis oil organic fraction could lead to equipment corrosion upon combustion. Table 3.11 Properties of pyrolysis oil and chloroform treated pyrolysis oil [Jacobson, 2011]. Property Pyrolysis Oil Chloroform Treated Pyrolysis Oil Heating Value (MJ/kg) 21.6 44.0 Ash content (wt%) 0.03 0.06 Moisture Content (wt%) 30.6 0.02 pH 5.0 5.2 Viscosity (cP) - 359 C (wt%) 36.5 51.6 H (wt%) 8.6 5.6 N (wt%) 0.03 0.05 S (wt%) 0.01 0.6 O (wt%) 55.0 42.1 H/C ratio 0.23 0.11

(d) Pyrolysis oil can also be upgraded to produce a product similar to petroleum hydrocarbons Pyrolysis oils can be upgraded by either applying catalysts in the production process (catalytic fast pyrolysis-University of Massachusetts – Amherst - Anellotech), which can produce gasoline products such as naphthalene and toluene in under two minutes [Anellotech, 2011], or by post-treatment of the oil over a catalyst bed (hydrodeoxygenation, HDO), which is similar to the hydroprocessing of petroleum. The H 2 consumption for HDO upgrading has been found to vary in the range of 27–31 gmol/L of pyrolysis oil processed [Agrawal & Singh, 2010]. The hydrotreated oil is hydrodeoxygenated and has an energy content of 39–43 MJ/kg (31 MJ/L) and can easily be converted to gasoline and diesel fractions with further hydrocracking [Czernik & Bridgwater, 2004]. BINGO (Dynamotive) and Envergent (Ensyn) are currently developing commercialization of post pyrolysis oil hydroprocessing at centralized locations [Dynamotive, 2011; Ensyn, 2011; Envergent, 2011]. Similarly, hydrogen can be added directly to the pyrolysis reactor (hydropyrolysis at 400-600 oC and 250-500 psia) to produce gasoline products. In this process hydrogen can be produced by gasifying/reforming a portion of the biomass. This technology is currently being researched by Purdue University and is termed H2BioOil [Agrawal & Singh, 2009; Singh, et al., 2010]. Another option is FCC upgrading at atmospheric pressure whereby the oxygen in the oil is removed as CO 2. However, a limited yield of hydrocarbon products (20-30 wt%) occurs due to coking over the FCC catalyst (zeolite) and loss of carbon as CO 2 [Adjaye & Bakhshi, 1995a; Adjaye & Bakhshi, 1995b; Horne & Williams, 1996; Samolada et al., 1998; Venderbosch & Prins, 2010].

Other technologies to produce liquid oil from woody biomass include aqueous phase processing, which combines sugar fractions with water to produce gasoline (250 oC). The downfall with this technology is that complex feeds containing lignin and hemicelluloses cannot be treated [NSF, 2008]. Hydrothermal

57 Options for Value-Added Processing of Coastal Forest Debris liquefaction (350 oC and 200 atm) can also produce a liquid product which has reduced oxygen content, but the process requires high pressure. The liquid also has a very high viscosity compared to pyrolysis oil [Elliott et al., 1991; Goudriaan & Peferoen, 1990; Moffatt & Overend, 1985; Naber et al., 1997; Venderbosch & Prins, 2010].

3.3.7 Potential Technology Suppliers

Although laboratory studies regarding the thermal decomposition of various organic substances have been carried out for many years, the technology development of fast pyrolysis started only 20 years ago when the advantages of liquefying biomass were recognized. During this time research was focused on the development of pyrolysis reactors, such as the vortex, rotating blades, rotating cone, cyclone, transported bed, vacuum, and the fluid bed reactor. Since the late 1990s, pilot plants have been constructed in Spain (Union Fenosa), Italy (Enel), UK (Wellman), Canada (Pyrovac, Dynamotive, Ensyn), Finland (Fortum) and the Netherlands (BTL-BTG) [Venderbosch & Prins, 2010].

Manufacture of pyrolysis oil is now at the commercial stage. Listed below are some key leaders in pyrolysis oil production. However, those pilot plant projects that were stopped after initial testing are not discussed. These plants include Union Fenosa, Enel, Wellman, Fortum, and Pyrovac’s large-scale installation in Jonquiere, Canada [Venderbosch & Prins, 2010].

- Anellotech (New York, New York) – was launched from the University of Massachusetts at Amherst. They have exclusive global rights to the University’s catalytic fast pyrolysis technology developed by George Huber to produce green gasoline. The company anticipates commercialization by 2019. The first plant construction is scheduled for 2014 [Anellotech, 2011].

- Advanced BioRefinery Inc (ABRI) Tech Inc . (Ottawa, Ontario) – (formerly known as Encon Enterprise Inc.) has built and tested a mobile fast pyrolysis unit (heated auger system) to convert forest slash to pyrolysis oil. They have a joint venture with Forespect Inc. (Namur, Quebec). Their technology has evolved to the point where the company builds and sells 1-50 ton per day (tpd) units. The first commercial 50 tpd system (October 2009) is being commissioned in Iowa and will produce pyrolysis oil and bio-char from agricultural waste [ABV Biorefinery Inc., 2011; Badger & Fransham, 2003; Venderbosch & Prins, 2010].

- Agri-Therm (London, Ontario) – is a Canadian company dedicated to developing portable and stationary equipment to produce pyrolysis oil. In conjunction with the Western Fluidization Group at the University of Western Ontario, they have patented a unique fluid bed reactor. In 2010 they partnered with Abuma Manufacturing for their MS200 mobile pyrolysis unit [Agri-Therm, 2011].

- ASG BtL (Switzerland) – was founded by two entrepreneurs and is currently a group of engineers that supply multi task manufacturing plants to industrial clients for over 20 years. They work collaboratively with the University Tecnologi Malaysia. They have designed and operated a pyrolysis pilot plant based on a low pressure thermo-catalytic single step (TCSS) system to upgrade biomass to EN 590 standard diesel fuel. This technology is based on research done by Bayer [Bayer, 1992]. This produced fuel is essentially a replacement to petroleum fuel. The process can also make other hydrocarbons such as kerosene.

- Avello Bioenergy (Iowa, U.S.) – based at Iowa State University has a new pyrolysis technology that improves, collects and separates pyrolysis oil into various liquid fractions that are analogous to the “heavy ends” and “light ends” in petroleum refining. The company hopes to use the separation technology to produce pyrolysis oils that can be used to replace petroleum-based materials in asphalt, as well as for renewable chemicals and renewable industrial fuels. Avello has a pilot unit running at a

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quarter-ton of biomass per day, and is raising funds for a 2.5 ton per day demonstration of its technology. Iowa State has been working since 2007 under a $22.5 million seven-year grant from ConocoPhillips, supporting the university’s research into the development of fast pyrolysis oils [Biofuels Digest, 2010].

- Battelle (USA) is one of the largest independent research and development organizations, working to advance scientific discovery and application in the world. The company, founded in 1929, is active in different fields of research (advanced material, energy, environment etc.). The company recently developed a catalytic pyrolysis followed by the hydrotreatment (mainly hydrodeoxygenation) of the intermediate bio-oil. Battelle catalytic pyrolysis is mainly targeting small systems, suitable for broad deployment [Battelle, 2012].

- BTL-BTG (The Netherlands) – has more than 15 years of experience with pyrolysis. BTG's fast pyrolysis technology is based on intensive mixing of biomass particles and hot sand particles in a modified rotating cone reactor. Their pilot plant was constructed in 1998, while the small-scale test facility was constructed in 2004. In 2005, BTG built a 2 tph production plant in Malaysia, using Empty Fruit Bunch (EFB) as feedstock [BTL-BTG, 2012; Venderbosch & Prins, 2010].

- Dynamotive Energy Systems (Vancouver, British Columbia) – the company was incorporated in 1991 and has patented a fast pyrolysis (Biotherm) technology for conversion of organic residues. Their product is trademarked as “BioOil.” The company has developed two innovative technologies from its Waterloo Research Facility: Fast Pyrolysis and BINGO (Biomass into GasOil). BINGO refines BioOil into clean usable mobile fuel. Dynamotive is currently working on developing and scaling this technology. They have licensed their technology to companies in Europe and Australia [Dynamotive, 2011; Venderbosch & Prins, 2010].

- Ensyn Corp (Ottawa, Ontario) – was incorporated in 1984 and use core technology (Rapid Thermal Processing (RTP TM )) to transform carbon based feedstocks to valuable chemicals and fuel products in an entrained flow reactor. It has been producing PyOil for over 20 years and is allied with UOP LLC, and Honeywell. They have designed, built, and commissioned seven RTP TM plants in Canada and the USA. In total, Ensyn’s core products go into the manufacture of more than 30 commercial chemical and fuel products, all of them based on Ensyn’s unique RTP™ technology. Their pyrolysis technology was developed at the University of Western Ontario. They are currently partnering with Tolko Industries to construct the World’s largest pyrolysis plant (400 tpd) in High Level, Alberta. They also have a deal with Malaysia to construct nine fast pyrolysis plants by 2015. They have joined with UOP and Envergent Technologies LLC for production of transport fuels from PyOil. This complimentary technology is expected to become commercial by 2012-2013. The joint venture was selected as a recipient of a $25 million DOE grant to demonstrate pyrolysis oil upgrading technology at a Tesoro refinery outside of Honolulu [Ensyn, 2011; Envergent, 2011; Venderbosch & Prins, 2010].

- KiOR (Pasadena, Texas) - is a biofuels company which produces a renewable crude oil substitute called Re-Crude TM . KiOR began testing its process in several outside labs and by the first quarter of 2009, KiOR assembled its own in-house pilot plant. In first quarter of 2010, KiOR commenced operation on its demonstration plant, which produces up to 15 barrels of Re-Crude TM per day and represents a several hundred times scale-up from the pilot. The company has developed a proprietary biomass-to-renewable crude conversion process, which combines KiOR’s catalyst systems with a technique based on existing fluid catalytic cracking (FCC) technology, a proven process used for decades in oil refining [KiOR, 2011].

- Metso, UPM, Fortum, and VTT (Helsinki, Finland) - Metso, UPM, Fortum and VTT have developed an integrated biomass-based pyrolysis oil production concept to provide an alternative to fossil fuels.

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The joint venture started in 2007 (Fortum joined in August 2009), the pilot plant was finalized in early 2009, and hot commissioning took place during the spring and summer of 2009. Close to 90 tons of pyrolysis oil have been produced from sawdust and forest residues with high availability and via a reliable process from an integrated pilot plant [Metso, 2011; Venderbosch & Prins, 2010].

- PYTEC (Hamburg, Germany) – was founded in 2002 and in cooperation with its sister company TEC, has been developing the BtO- process (pyrolysis process for thermal conversion of biomass to pyrolysis oil). Since December 2005, the first pilot scale plant (4 pyrolysis oil tpd) using fast ablative pyrolysis has been working [PYTEC, 2011]. PYTEC has an affiliate in Canada called PyTrade.

- RTI International (U.S.) - research engineers at RTI International are developing a process that could enable the U.S. to replace fossil fuels with domestically produced cellulosic biofuels. The two- year project is being funded by the Department of Energy's recently formed Advanced Research Projects Agency–Energy (ARPA–E). RTI is developing a process through which second-generation biomass feedstocks are transformed into a form of bio-crude oil. The catalytic pyrolysis process under development would produce a dramatically improved bio-oil by using multifunctional catalysts to remove the oxygen and other contaminants. They are partnered with Archer Daniels Midland Company and ConocoPhillips [RTI, 2012].

- Three Dimensional Timberlands LLC (3-DT) (Oregon, U.S.) - has the exclusive rights for the Pacific Northwest Region of the United States to the only continual-feed vacuum pyrolysis process proven on a commercial scale, having run successfully for 2,000 hours at a capacity of up to 3 metric tons of feedstock per hour. 3-DT has made a deliberate decision to produce both biochar and bio-oil from an economic and practical standpoint. This is done through a vacuum pyrolysis unit as opposed to a traditional fast pyrolysis unit used for liquid production. In turn their feedstock requires less pre- processing and can accommodate 1 inch biomass chips. The process produces 28% oil, 26% char, and 32% gas. It is scalable to 20 ton per hour [Three Dimensional Timberlands, 2012].

- Tolero Energy LLC (Sacramento, CA with research lab facilities in Chilliwack, BC) - is a private biofuels company founded in 2009 that has acquired an exclusive worldwide license for a patented technology developed at the University of Georgia in Athens, Georgia. The company claims the technology allows it to convert cellulose, such as wood, agricultural crop residues, and other sources of cellulose into an ultra low sulfur liquid transportation and heating fuel on-site without additional downstream refining at an unsubsidized cost of less than $1 per gallon. The technology, a proprietary vapour processing system that changes the vapour’s chemical makeup as it is condensed before polymerization, allows a liquid fuel fraction of pyrolysis to be miscible with petroleum. The technology also differentiates Tolero from other pyrolysis companies as it does not require exotic or expensive catalysts. Tolero Fuel has been tested in petroleum diesel blends and meets the requirements for diesel fuel (ASTM D975). The fuel can be used as a blend in conventional, unmodified diesel engines. In addition to Tolero Fuel, the process also produces bio-char and syngas. The bio-char byproduct can be used to heat homes and businesses as an alternative to wood pellets, logs and petroleum-based sources of heat. It may also be used as a source for activated charcoal, or as a soil supplement to reduce fertilizer requirements. The syngas can be used in the manufacturing process as a supplement to natural gas to make the process more self-sustainable and less expensive. Tolero claims to have improved upon the UGA technology in a variety of ways. Tolero has developed a unique method to convert the petroleum miscible Tolero Fuel into a cellulosic diesel called Tolero Premium. This method is cost effective and will be done at the facility so Tolero Premium will require no additional refining. Because the Tolero vapour condensation approach is an “add-on” technology the company claims it can be used with virtually any pyrolysis system. Tolero’s business model uses a modular design for future facilities consisting of one or more 50-75 TPD reactors at a single site. The company claims this approach minimizes many of the potential scaling issues associated with building larger facilities. The Company anticipates that the output of the pyrolysis

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process with its technology will result in approximately 60-70% liquids, 15-25% bio-char and 10% syngas, typical of fast pyrolysis systems. As part of the process of making Tolero Fuel, there is an aqueous phase fraction (“APF”) of the bio-oil that is created. The Tolero research chemist working in Chilliwack, B.C. with support from the Canadian NRC IRAP Program is presently developing the most effective way to isolate the chemical components of the APF for sale into the industrial chemical market. A chemical analysis of the Tolero APF indicated several valuable chemical components in relatively high ratios in the material. Most notable were: Acetic Acid (17.7%), Levoglucosan (16.4%), Hydroxyacetone (9.1%), Methyl Acetate (3.5%) and Methanol (3.3%) (vol. % of APF). These are high value chemicals which if isolated and purified can be sold on commodity markets throughout the world.

Tolero has undergone a test protocol with Det Norske Veritas Petroleum Services Inc. (DNV), the world’s largest certifier of fuels for the marine transportation market. Tolero Fuel products, blended with diesel, have passed the requirements for D975 and Marine Gas Oil (MGO). Tolero claims that it has in place off-take agreements for sale of both the Tolero Fuel and Tolero APF. In late 2011, the Company installed its technology on a commercial, 15 TPD (4,950 YPY) plant in Alabama. This facility was built with a pyrolysis manufacturer in partnership with the US Army. In Q4 2011, Tolero produced petroleum miscible fuel in this facility. The pyrolysis manufacturer is working through some start up issues with its equipment which should be resolved in Q1 2012. Tolero also has developed a unique opportunity to enter into a joint venture for an existing pyrolysis factory located in California. This facility was constructed in 2008. The plant, which can process up to 75 TPD (24,750 TPY) of biomass, was constructed to convert municipal solid waste to electricity. The plant was not able to operate cost effectively and was shut down in 2010. Tolero plans to test its technology at the facility in Q1 2012, start limited production shortly thereafter, and be in full production by the summer of 2012 [Tolero Energy, 2011].

Other mentionable research labs developing pyrolysis technologies include Georgia Tech Research Institute (Atlanta, Georgia), Purdue University (West Lafayette, Indiana), Laval University (Quebec City, Quebec), Aston University (Birmingham, West Midlands), NREL (Golden, Colorado, formerly known as SERI), CNRS (France), University of Twente (Netherlands), and Forschungszentrum Karlsruhe (Germany). Tables 3.12 and 3.13 contain information regarding pyrolysis units worldwide [Oasmaa & Peacocke, 2010].

Table 3.12 Fast pyrolysis reactor types and example organizations [Oasmaa & Peacocke, 2010]. Reactor Type Example Organizations (not all are currently active) Fluid Bed Aston University (UK), Biomass Engineering Ltd. (UK), Dynamotive (Canada), Hamburg University (Germany), INETI (Portugal), Leeds University (UK), Sassari University (Italy), ZSW-Stuttgart University (Germany), East China University of Science and Technology (China), FZK (Germany), vTI (Germany), Iowa State (USA), University of Maine (USA), University of Seoul (Korea), MARA Institute of Technology (Malaysia), Metso (Finland), Institute of Chemical Industry of Forest Products (China), University of Western Ontario (Canada), PNNL (USA), Virginia Tech (USA), VTT (Finland) Cyclonic Reactor University of Nancy (France) Ablative PYTEC (Germany), Aston University (UK), NREL (USA) Circulating fluid bed CRES (Greece), Ensyn (Canada and USA)

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Screw reactor FZK (Germany), Mississippi State University (USA), Renewable oil International (USA), ABRI-Tech (Canada) Rotating cone Twente University (the Netherlands), BTG (the Netherlands), Genting (Malaysia) Transported bed Ensyn (Canada), Red Arrow (USA), VTT (Finland) Vacuum moving bed Laval University/Pyrovac (Canada)

Table 3.13 Pyrolysis liquids production processes, 2010 (> 10 kg/h) [Oasmaa & Peacocke, 2010]. Host Country Technology kg/h Applications Status Organization ABRI-Tech/ Canada Auger 70–700 Fuel Operational Advanced 2 000 Commissioning Biorefinery Inc., Forespect Agri-Therm/ Canada Fluid bed 420 Fuel Upgrade University of Western Ontario Biomass UK Fluid bed 250 Fuel and Construction Engineering Ltd. products BTG Netherlands Rotating cone 200 Fuel and Operational 5 000 chemicals 5 t/h in design phase BTG/Genting Malaysia Rotating cone 2 000 Fuel Dormant Dynamotive Canada Fluid bed 80 Fuel Disassembled 625 Dynamotive Canada Fluid bed 4 200 Fuel Operational 8 400 Dynamotive Canada Fluid bed 80 Fuel Standby 625 KIT Germany Auger 1 000 Operational Metso Finland Fluid bed 300 Operational PYTEC Germany Ablative 250 Operational Red Arrow/Ensyn USA Circulating 125-1 250 Operational several transported bed University of Germany Circulating 50 Operational Hamburg transported bed University of China Fluid bed 120 Operational Science and Technology of China, Hefei Virginia Tech USA Fluid bed 250 Operational VTT Finland Circulating 20 Operational transported bed

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3.3.8 Budget-Level Capital/Operating Costs

Table 3.14 contains information on generic plant sizes, feedstock price, estimated pyrolysis oil cost, and capital investment as outlined in the various reports. Please note that all feedstock sources are not wood waste [Ringer et al., 2006].

Table 3.14 Plant size, feedstock price, product cost, and capital investment [Ringer et al., 2006].

Size Feed Cost Feed Pyrolysis Oil Pyrolysis Oil Total Capital Source (tonne/d) ($/dry Cost Cost ($/kg) Cost ($/GJ) Investment tonne) ($/GJ) 2.4 $22 $1.10 $0.38 $21.20 $97,000 [Isalm & Ani, 2000] 24 $22 $1.10 $0.18 $10.10 $389,000 [Isalm & Ani, 2000] 100 $36 $1.80 $0.26 $14.50 $6.6 million [Mullaney, 2002] 200 $36 $1.80 $0.21 $11.70 $8.8 million [Mullaney, 2002] 400 $36 $1.80 $0.19 $10.60 $14 million [Mullaney, 2002] 1,000 $46.50 $2.33 $0.09 $5.00 (Not given) [Cottam & Bridgwater, 1994] 1,000 $44 $2.20 $0.11 $6.10 $46 million [Gregoire & Bain, 1994] 250 $44 $2.20 $0.11 $6.10 $14 million [Gregoire, 1992] 1,000 $20-$42.50 $1.00- $0.13-$0.54 $7.30-$30.00 $44-143 million [Solantausta et al., $2.13 1992] 250 $11 $0.55 $0.10 $5.60 $14 million [Arthur J. Power and Associates, Inc, 1991] 1,000 $44 $2.20 $0.09 $5.00 $37 million [Arthur J. Power and Associates, Inc, 1991]

Sorenson Study (2010)

In May 2010 a detailed economic analysis of the potential for fast pyrolysis plants based on woody biomass in southwest Oregon was published [Sorenson, 2010]. This study examined four competing pyrolysis technologies (Ensyn, Dynamotive, ABRI and ROI) for two sizes/types of plant. Relying on ROI as its primary industrial collaborator for cost data, supported by third party information and internal analysis, the study examined the viability of a 50 BDT/D (bone dry tons per day) mobile plant configured on 2 x 53’ low bed trailers, and a 200 BDT/D fixed plant consisting of 5 x 50 BDT/D modules (of which 4 were assumed to be in operating condition at any point in time). Since at the time of writing ROI had only built one 5 BDT/d mobile and one 50 BDT/D modular demonstration plants, the cost and performance assumptions for the study were projections. The production and cost/revenue assumptions for each scenario are shown in Tables 3.15 and 3.16.

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Table 3.15 Product and plant assumptions [Sorenson, 2010].

Table 3.16 Cost and Revenue Assumptions (Sorenson, 2010)

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Assuming a ten year plant operating life and 60% debt financing, the study concluded that the 50 BDT/D mobile plant would have a positive net present value (NPV) of approximately US$36,000 after-tax. In comparison, the 200 BDT/D fixed plant was estimated to have an NPV of US$9,681,000 after tax. These results are shown in Tables 3.17 and 3.18.

Table 3.17 Mobile plant cash flow projections [Sorenson, 2010].

Table 3.18 Fixed plant cash flow projections [Sorenson, 2010].

Of particular relevance to this report, the Sorenson study estimated the feedstock cost for the mobile plant at US$20.70/ton assuming a 10 mile round trip from source to plant. For the fixed plant the estimated feedstock cost was US$45.33/ton assuming a 10 mile round trip for raw feed, amalgamation to larger loads at a suitable landing site, and transport of large loads in chip vans over a 90 mile round trip to the plant.

ABRI Model

ABRI, a Canadian technology company, developed a proprietary financial model for its 50 tpd and 100 tpd pyrolysis systems. This model was provided to UBC’s CHBE on a confidential basis. The model assumes that ABRI technology produces 60% pyrolysis oil and 20% char. For the generic base case, the cost per dry tonne of feedstock was set at $30. Repair and maintenance, fuel, insurance, equipment, electricity, truck, development, and employees costs are input. The pyrolysis units are assumed to operate

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330 days per year. The pyrolysis oil is sold at a cost of 0.75/gal and $100/tonne for char assuming fertilizer usage.

Additional details regarding this financial model are presented in Section 5. In this section, WFP input parameters were entered to project financial outcomes related to the deployment of the pyrolysis technologies on Vancouver Island.

Tolero Financial Model

Tolero Energy LLC developed a similar spreadsheet-based model, which encompasses their proprietary solvent extraction technology. This model was made available to Greenleaf on a confidential basis. In a similar fashion, WFP input parameters were entered to project financial outcomes related to the deployment of the Tolero technology on Vancouver Island. Results are presented in Section 5 of this report.

3.3.9 Distillation/Refining of Bio-Oil

ABRI – ABRI is currently working in cooperation with Dr. Marcel Schalf from the University of Guelph to treat the produced pyrolysis oil using red mud from aluminum refining as a catalyst for both post upgrading and as co-processing pyrolysis catalyst on their 1 dry tone per day system [Fransham, 2012]. Addition of an upgrader to the ABRI-Tech system is assumed to cost approximately $2 million for a total capital cost of $8 million. The liquid yield would drop to 25% but the value of the oil produced is assumed to rise to $1.50/gal. Maintenance costs can be kept at 4% of capital. The IRR for the complete system is approximately 15% and may therefore be attractive to investors [ABRI (confidential), 2010].

Agri-Therm – the development of a new mobile pyrolyzer for the pyrolysis of agricultural and forestry waste, in partnership with Franco Berruti and Dr. Briens (University of Western Ontario) is underway. In addition, another project involves the upgrading of the pyrolytic pyrolysis oil, in collaboration with Franco Berruti, Dr. Briens, and Imperial Oil [Western Engineering, 2012].

Battelle – Battelle’s catalytic pyrolysis process utilizes a hydrotreating (hydrodeoxygenation) step to upgrade the pyrolysis oil. Unlike conventional pyrolysis processes, the hydrogen gas required for hydrodeoxygenation of pyrolysis oil comes from water-gas shift reaction of CO produced in the catalytic pyrolysis reactor. Figure 3.14 shows the pathway for fuel production by Battelle. The company is still developing the pyrolysis oil hydrotreating technology and short term the target would be selling the upgraded oil to the oil companies.

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Figure 3.14 Fuel production pathway difference between Battelle and conventional pyrolysis processes [Lucius, 2011].

BTL-BTG – In lab scale, company has hydrotreating units in order to produce a more fossil fuel like product. According to the company, the results of this unit are very promising. BTL’s parent company, BTG, is currently involved in the BioCoup project. BioCoup is a research project for developing a hydrotreatment unit for upgrading the pyrolysis oil produced in the BTL-BTG plants. Research in this project has demonstrated on laboratory scale that up to 20 % of mild hydrotreated pyrolysis oil can be mixed in a standard refinery. Pyrolysis oil derived products with an oxygen content lower than 2 wt% have been produced, by a combination of mild hydrotreating and further hydrotreating in a second step using dedicated catalysts. This technology is currently not available on commercial basis. The following step for the company will be demonstration on pilot plant scale.

BTG also has a chemical extraction pilot plant in which the following products are produced: bitumen, phenol-formaldehyde based glue, organic acids, sugars etc. If there are clients who have an application for those products, the company can make a design for the clients in order to construct a chemical extraction plant.

Dynamotive – though lignin comprises only 20-30% of typical lignocellulosic biomass it provides 40- 50% of the overall heating value/available energy of the biomass. Dynamotive’s focus is therefore on methods that aim to utilize whole lignocellulosic biomass. The BINGO Upgrading process, under development by Dynamotive, involves BioOil hydro-reforming and overcomes the defects of BioOil that retard its acceptance. Dynamotive’s pyrolysis stage is designed to maximize liquid yields, which means the pyrolysis process is somewhat more complex since conditions must be established for rapid heating of biomass particles. However since the water will separate during the reforming stage of BINGO, the moisture content of the BioOil is not as crucial, thus minimizing potential biomass drying costs.

Dynamotive Energy Systems Corporation has developed a proprietary process that addresses these challenges and can deliver advanced (second generation) fuels from biomass at a cost less than $2 per gallon. This is achieved by upgrading Dynamotive’s BioOil via BINGO. BINGO is a two stage process.

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The first stage is hydro-reforming in an autoclave of BioOil to stabilize it, render it miscible with hydrocarbon liquid, cause phase separation of the water in the BioOil, lower its viscosity, lower its corrosivity, and lower its oxygen content from ~50% in the raw BioOil to around 10%. Once BioOil is put through the Hydroforming process it becomes a product designated UBA. However, UBA still contains ~ 10% oxygen. It is not a pure hydrocarbon and needs further treatment to convert it to motor fuel grade products. The hydro-reforming reaction was carried out in an autoclave. Table 29 lists the reaction details and product analysis for UBA [Radlein & Bouchard, 2009].

The second stage of upgrading involves a conventional hydrotreatment over a commercial catalyst in the presence of hydrogen in an autoclave. The liquid product from stage 2 is designated as UBB. Tables 3.19 and 3.20 list the reaction details and product analysis for UBB [Radlein & Bouchard, 2009].

Table 3.19 Reaction conditions and product analysis for Stage 1 (UBA) [Radlein & Bouchard, 2009].

Table 3.20 Reaction conditions & product analysis Stage 2 (UBB) (Radlein & Bouchard, 2009] .

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As evident from the preceding table, the water phase is relatively clean so acetic acid (worth on the order of $700/T-$1,500/T depending on purity) can be recovered using conventional technologies. This has been demonstrated in the laboratory using liquid-liquid extraction. Since the HHV of BioOil is ~16 MJ/kg while that of hydrogen is ~121 MJ/kg, it may be seen from the data above that reaction is approximately thermoneutral so that of the energy content of the BioOil has been effectively concentrated in UBA. This implies that the Energy Efficiency of this step is over ~ 80%. The HHV of UBB at ~45 MJ/kg is comparable to that of diesel. The overall yield of UBB from BioOil is 38%, while deoxygenation of BioOil was ~98% [Radlein & Bouchard, 2009].

The cost analysis for the BINGO process is given in Table 3.21 [Radlein & Bouchard, 2009]. A 200 tpd biomass pyrolysis plant will yield 130 tpd BioOil + 20 tpd char. This will be converted to 58.5 tpd UBA (0.45 x 130). Hydrogen can be sourced from petroleum refineries for less than $3/kg for small scale deliveries out of pipeline range. The hydrogen consumption for UBA is 14 kg/(T BioOil). Conversion to UBB required 9 kg H 2/(T BioOil). Therefore, the final stage of upgrading should be carried out at an oil refinery where hydrogen is cheaper and co-processed with petroleum. Acetic acid was assumed to be worth the low range of $800/T, where daily production would be 7.2 T. If 90% is recovered this equates to $5,180 per day which would offset the hydrogen cost. In addition char is valued at $150/tonne [Radlein & Bouchard, 2009].

Table 3.21 Cost analysis of BINGO process [Radlein & Bouchard, 2009].

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Ensyn - The Ensyn RTP TM process is based on 20 years of proven pyrolysis technology. Ensyn has built and operated several plants since the early 1990s. The RTP TM process combined with well-known fluid catalytic cracking (FCC) of UOP, may ensure reliable production of diesel from biomass. UOP is a world leader in the development of refining and upgrading processes with several decades of experience in oil and refinery industries. UOP licenses more than 250 FCC units worldwide, which is equal to 50% of worldwide gasoline production capacity. Involvement of UOP in the Envergent Technology (joint venture of Ensyn and UOP) is an extra guarantee on the viability and reliability of Ensyn RTP TM process for biomass and diesel production.

On April 6, 2012 Biofuels Digest reported on the Advanced Biofuels Leadership Conference this year in DC with particular emphasis on a pair of presentations by Honeywell’s UOP and Ensyn. Honeywell’s UOP announced two projects; one about its ATJ (alcohol to jet) technology release, and the other about a breakthrough on pyrolysis.

At the core of the Ensyn-Honeywell announcements are two claims. First, that their pyrolysis process is capable of producing RTP fuel at scale for a price of $45 per barrel of oil equivalent. Second, the RTP fuel can be upgraded at the refinery using a modification of apparently standard refinery equipment common in North America.

According to the article, this will be a game changer for three reasons:

1. There’s the cost. At $45 per barrel for a competitive product to crude oil it is more affordable than the $101 per barrel price that light, sweet crude was recently trading for on the NYMEX. Perhaps more importantly the brand wrapped around this claim is Honeywell, a Fortune 100 corporation.

2. This brings refiners into the game. It puts the refinery into the advanced biofuels game as a producer, rather than an obligated blender, of advanced biofuels. By producing an affordable alternative to crude oil, that is upgradable using standard equipment that refineries already have, refiners will look at advanced biofuels in a new way. From the refiners’ point of view, RTP fuel might look like another feedstock for their refining process, only one with cost advantage and renewable attributes. Given a choice between complying with the Renewable Fuel Standard by blending someone else’s product into theirs, it will be much more financially attractive to refine products like RTP fuel, and satisfy the blending obligations imposed by RFS2 on a business-as- usual basis. In effect, this offers a domestic source of transport fuel that heals, rather than exacerbates, the divide between traditional energy and the renewable fuels industry.

3. Then there’s scale. Once the refinery technology upgrade is in place, using existing refineries increases the volume opportunities sharply from what are considered standard advanced biofuels capacities of 10-100 million gallons per year, per project. Oil refineries are volume monsters. Two refineries in Texas each have capacities in the 500,000 barrels per day range. Refinery scale means billion-gallon potential per project.

Honeywell’s UOP team is reporting yields in the 70 gallons per ton of biomass range with indications that it can reach 90 gallons per ton over time. According to the article the process is relatively agnostic with respect to feedstock. In 2010, at the time that Envergent received a $25M DOE grant to build a fast pyrolysis and upgrading unit at the Tesoro refinery in Kapolei, Hawaii, they said they would test waste agriculture products, pulp, paper, woody biomass, algae and dedicated energy crops like switchgrass and high-biomass sorghum.

If Honeywell’s UOP and Ensyn deliver on the promise indicated in the presentations, the article concludes that the industry might expect to see these technologies coming online at refineries in the mid-

70 Options for Value-Added Processing of Coastal Forest Debris decade. That will be just as the cellulosic biofuels mandates start to have extravagant volumes, in the billions of gallons per year.

PYTEC – According to the company, the produced bio-oil is clean and ready for final use and can be directly used in stationary diesel engines as a replacement for heating fuel. Potential consumers of the oil are schools and public organizations which can use the pyrolysis oil mixed with fossil fuels. No further information was available on whether the PYTEC pyrolysis process utilizes a hydrotreating unit or not. Based on the information posted on the company’s website and communications with the company, UBC researchers believe that the pyrolysis oil produced in the PYTEC’s process will not be hydrotreated at the moment [PYTEC, 2012].

3.3.10 Compatibility with Existing Engine Technologies

Diesel engines are relatively insensitive to the contaminants present in pyrolysis oils, especially in the case of large and medium scale engines. In general, diesel engine development and testing suffers from insufficient quantities of available pyrolysis oil and a lack of interest from engine (parts) manufacturers. Nevertheless, the results obtained indicate that engine deterioration can be a serious problem. Traditional diesel engines are designed to operate on acid free fuel and all engine components are manufactured with materials (steel) to comply with these fossil fuels. Severe wear and erosion was observed in injection needles using pyrolysis oils due to the fuel’s acidity and the presence of abrasive particles. Nozzles were found to last longer when the oil was filtered, but it is clear that standard nozzle materials are inadequate [Venderbosch & Prins, 2010 ].

Another issue plaguing pyrolysis oil use in diesel engines is high viscosity and low stability with rising temperatures. Damage to nozzles and injection systems, and buildup of carbon deposits in the combustion chamber and the exhaust valves has been reported [Venderbosch & Prins, 2010]. Engines with larger cylinder bores (medium and low speed engines) are expected to be the most suitable because of less stringent construction tolerances. For smaller bore engines, reduction of the oil viscosity is required. Injection modification and a high turbulence combustion chamber are also required. Because the pyrolysis oils have poor ignition properties (cetane index below 10), they should be enriched with the addition of cetane improvers, and the application of a dual fuel system is most appropriate. In spite of all these problems, it has also been reported that modifications to both pyrolysis oil and the engine can make the oils quite acceptable for diesels [Ikura, 2003; Venderbosch & Prins, 2010 ].

The properties of pyrolysis oil are quite different from diesel, and the most important ones for application in a diesel engine are: [Beld et al., 2011] • Pyrolysis oil is acidic, typical pH ~2.5 - 3. All piping and devices in contact with pyrolysis oil should be corrosion resistant; • Pyrolysis oil contains typically 20-28 wt% water, lubrication is poor and small particles (< 20 µm) might be present. This may cause severe abrasive wear, in particular in the injector; • The viscosity of pyrolysis oil is higher than that of diesel fuel, and strongly depends on water content and temperature. Reducing the water content will cause a significant increase in viscosity; • Pyrolysis oil is sensitive to re-polymerization if temperature rises above 50-60 °C occur. Re- polymerization may result in small particles in the oil and increase in viscosity; • Pyrolysis oil is more difficult to ignite, and higher temperatures will be required to achieve complete combustion. An important indicator is the Cetane Number (CN). However, the actual CN for pyrolysis oil is highly unclear and values between 5 and 25 are reported. In addition, it is known that the ignition delay for pyrolysis oil is higher than that of diesel;

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• The Heating Value of pyrolysis oil is significantly lower than that of diesel (approx. ½ the value on a volumetric basis). Obviously, for the same energy input twice the volume of fuel needs to be injected; • Direct mixing of pyrolysis oil with mineral diesel or biodiesel is not possible

3.3.12 References

See Appendix 1

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4. Analysis of Potential Product/Output Markets

Export markets for wood pellets produced in BC have been well established in Europe. Much smaller markets for densified products exist regionally. No well defined markets have yet been developed for unrefined Pyrolysis bio-oil. Analysis of market potential beyond established applications will focus upon the potential for fuel switching away from conventional fossil fuels, such as coal, natural gas and fuel oil. Analysis will focus primarily upon the displacement of coal and natural gas for densified product scenarios and upon the displacement of fuel oil for pyrolysis bio-oil scenarios. In both regional and export markets, demand for sustainable fuels derived from biomass feedstocks is driven primarily by regulations and incentives geared to reduce the consumption of environmentally damaging fossil fuels.

4.1 Market Drivers – Regulations & Incentives

4.1.1 Regional Market – British Columbia

GHG Reduction Initiatives & Incentives

The government of British Columbia has legislated (or is in the process of developing) key regulatory programs which will increase demand for sustainable fuels within the region. Sustainable fuels are generally considered to be greenhouse gas (GHG) neutral. In BC, fuels produced using biomass derived from sustainable forestry operations qualify as “sustainable”.

The province has launched two initiatives which will encourage the use of sustainable fuels to reduce GHG emissions under the umbrella of Carbon Pricing Programs. In addition, legislation has been passed under the Renewable & Low Carbon Fuel Requirements Regulation which mandates the blending of sustainable fuels with conventional petroleum based fuel products.

BC Carbon Pricing Programs

The provincial Government has committed in legislation to reduce B.C.’s greenhouse gas emissions by at least 33 per cent below 2007 levels by 2020. In 2008, the Government released its Climate Action Plan outlining a number of strategies and initiatives underway and under development in order to help achieve this goal. Carbon pricing policies are identified in the Climate Action Plan as key strategies for reaching provincial greenhouse gas emission targets.

There are two main pieces of overarching legislation governing carbon pricing in B.C. – the Carbon Tax Act and the Greenhouse Gas Reduction (Cap and Trade) Act. Both Acts received Royal Assent on May 29, 2008.

Carbon Tax Act

The Carbon Tax Act provides the authority to establish a direct carbon price on the combustion/use of fossil fuels in British Columbia. Regulations pursuant to the Carbon Tax Act have been implemented in order to enable direct carbon pricing on fossil fuels in B.C. Applicable carbon tax rates by fuel are shown in Table 4.1.

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Table 4.1

Source: BC Ministry of Finance

The following sections covering: the Greenhouse Gas Reduction (Cap and Trade) Act ; GHG Reporting Regulation; Emissions Trading Regulation; and Cap and Trade Offsets Regulation; have been extracted from the BC Ministry of Environment Consultation Backgrounder – Carbon Pricing , available for download from: http://www.env.gov.bc.ca/cas/mitigation/ggrcta/pdf/carbon-pricing-bg.pdf

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Greenhouse Gas Reduction (Cap and Trade) Act

The Cap and Trade Act provides the statutory basis for setting up a market-based cap and trade frame- work to reduce greenhouse gas emissions from large emitters operating in the province and enables B.C.’s participation in the Western Climate Initiative (WCI) system. The Cap and Trade Act also provides the authority for developing and procuring offsets. The Cap and Trade Act is consistent with the recommendations of the design for the WCI regional program. The Reporting Regulation is the first regulation under the Cap and Trade Act. Provisions on compliance and enforcement under the Cap and Trade Act are planned to follow.

As shown below, the Greenhouse Gas Reduction (Cap and Trade) Act has three key components: Reporting Regulations; Emissions Trading Regulations and Offsets regulations.

British Columbia Cap and Trade legislation Source: BC Ministry of Environment Consultation Backgrounder – Carbon Pricing

Figure 4.1

GHG Reporting Regulation

The cap and trade system includes a rigorous emissions reporting requirement that ensures accurate and timely measurement and recording of GHG emissions by the entities included in the system. Reporting carbon emissions through B.C.’s Reporting Regulation has been instituted in advance of implementing a cap and trade system to accurately establish the level of emissions to help set the cap for 2012. The cap will be based on projected emissions in 2012 and subsequent years.

Source: BC Ministry of Environment Consultation Backgrounder – Carbon Pricing

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Emissions Trading Regulation

The proposed Emissions Trading Regulation is intended to establish an efficient, fair market with clear rules on how allowances are created, distributed for free or auctioned, traded, tracked and retired for compliance.

Development of the Emissions Trading Regulation has been informed by the Design for the WCI Regional Program . The regulation applies to facilities emitting 10,000 tonnes of CO 2e or more. Those facilities emitting 25,000 tonnes of CO 2e or more are defined as regulated operations and will be subject to the regulation on the basis of emissions source and overall emissions. The Emissions Trading Regulation will also define the process for distributing allowance units under the cap and trade system – including auction and/or free allocation processes, allowances available under the system (the cap), requirements of the compliance unit tracking system (registry), ensuring appropriate regulatory oversight and ensuring oversight of the carbon market in terms of transparency of activity and participation of appropriate market stakeholders.

The Emissions Trading Regulation will enable the development of annual allowance distribution plans by the Ministry of Environment across three year allowance budget periods and will allow integration with the broader WCI regional cap and trade system and carbon market. Source: BC Ministry of Environment Consultation Backgrounder – Carbon Pricing

Cap and Trade Offsets Regulation

Offsets are a key component of a cap and trade system as they reduce compliance costs for facilities while ensuring that the system achieves real reductions in carbon emissions. The proposed Cap and Trade Offsets Regulation will govern the development and recognition of carbon offsets, consistent with the offset design recommendations of the WCI and will build on the existing regulation introduced in 2008. The regulation established requirements for offsets to be retired against the carbon neutral government commitment. The new regulation will include new steps for offset process registration, validation, monitoring, quantification, reporting, verification, certification and issuance of offsets – so that offset units can be traded and used for compliance across the WCI region.

The Cap and Trade Offsets Regulation will provide the basis for a protocol-based offset system, establishing approved offset protocols for emission reductions projects and/or programs (aggregated projects over a defined program area). The regulation will enable the development of “compliance grade offsets” that facilities can then use to fulfill a portion of their compliance obligation. Approved protocols will define project type/program area and establish rigorous environmental standards and process requirements. Protocols are intended to ensure that offsets achieve real reductions in carbon emissions, and that emissions are verifiable, additional, permanent and enforceable.

Project developers with emission reductions that meet the requirements of the proposed regulation will be issued British Columbia Emission Reduction Units (ERUs). The ERUs will be delivered to an account held in a “Compliance Unit Tracking System (CUTS)” by the project developer for internal use or for sale into the carbon market. Buyers of ERUs could include regulated operations acquiring offsets to meet compliance obligations under the Cap and Trade Act , the Government of B.C. for meeting its carbon neutral government commitment or entities seeking to offset carbon emissions voluntarily.

Source: BC Ministry of Environment Consultation Backgrounder – Carbon Pricing

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Pacific Carbon Trust

The BC government established Pacific Carbon Trust as a Crown Corporation in 2008 as part of its integrated plan to address climate change. The PCT was created to deliver quality made-in-BC greenhouse gas offsets to help clients reduce their carbon footprint and drive the growth of BC's low- carbon economy. PCT purchases and sells fully verified carbon offsets, measured as one metric tonne of carbon dioxide or equivalent (CO 2e) that is reduced or removed from the atmosphere as a result of emission-reducing (offset) activities.

The revenue attached to selling offsets can help make clean technology projects a reality. To date, a total of $300 million in new capital investments can be attributed to carbon offset projects developed in the last three years. Since its inception in 2008, BC’s carbon offset market has become the third-largest in North America.

The Pacific Carbon Standard (PCS) defines the requirements for developing high-quality offsets to be recognized as Pacific Carbon Units (PCU). The Standard is based on the Emission Offsets Regulation (EOR) established under the British Columbia (BC) Greenhouse Gas Reduction Targets Act (the Act). source: http://www.pacificcarbontrust.com/what-we-do/

Renewable & Low Carbon Fuel Requirements Regulation

Under the Renewable & Low Carbon Fuel Requirements Regulation, fuel suppliers must ensure they supply the required minimum renewable fuel content, on a provincial annual average basis, in the fuel they supply in B.C.

The RLCFRR will reduce the carbon intensity of transportation fuels through two major requirements:

Renewable Fuel Requirement* Gasoline • 5 percent renewable content in gasoline beginning in 2010 Diesel • 3 percent renewable content in 2010 • 4 percent renewable content in 2012 and onward

Low Carbon Fuel Requirement* • 10 percent reduction in carbon intensity by 2020

(*source: http://www.empr.gov.bc.ca/RET/RLCFRR/Pages/default.aspx )

The following supplementary information has been extracted from the BC government web site providing answers to frequently asked questions (FAQs) regarding the RLCFRR, URL http://www.empr.gov.bc.ca/RET/RLCFRR/FAQ/Pages/default.aspx#1b

• The phased-in approach for diesel fuel is intended to provide the fuel industry with the time to identify supplies or put the necessary Canadian supply infrastructure in place and to address technical issues regarding the cold weather properties of biodiesel. This approach also allows the automotive industry time to address engine warranties which may limit the use of biodiesel.

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• In addition to the renewable fuel requirement, the low carbon fuel requirement requires the fuel suppliers to reduce the average carbon intensity (CI) of transportation fuels by ten percent by 2020. This requirement uses life cycle assessment to determine the overall CI of fuels used for transportation and includes all factors associated with the production and consumption of each fuel. This includes exploration and production of fossil fuels, production of crops for biofuels and the refining, transport and end use of the fuel. • The renewable fuel requirements apply to gasoline and diesel fuel when used for transportation or heating. The low carbon fuel requirements apply to gasoline, diesel fuel, natural gas, propane, ethanol, biodiesel and electricity when used for transportation. New low carbon fuels will be added as they become commercially available. • Fuel used for military operations is not included in the Regulation. Fuel used for locomotives is not included in the renewable requirement until 2012. All fuel producers and importers in British Columbia are considered to be fuel suppliers and are therefore subject to the Regulation. • Suppliers who provide less than a total of 200 million litres of gasoline and diesel class fuels in 2010 are exempt from the requirements to deliver renewable content and to reduce carbon intensity in 2010. From 2012 onward, the exemption limit will be 75 million litres.*

(*source: http://www.empr.gov.bc.ca/RET/RLCFRR/Pages/default.aspx ) • The Regulation will help reduce the environmental impact of transportation fuels and contribute to a low-carbon economy. This legislation supports B.C.’s goal to lower provincial greenhouse gas (GHG) emissions by 33 percent by 2020. • The Regulation enables the Province to set benchmarks for the amount of renewable fuel in B.C.’s transportation fuel blends and reduce the CI of transportation. As well, the Regulation creates additional choices for consumers to reduce their reliance on non-renewable fuels • In the near-term it is expected that B.C.'s renewable fuel needs will be met with fuels from Canadian and international suppliers. In the longer-term, however, it is expected that demand will encourage the development of new suppliers in Canada and B.C. • The Regulation applies to the entire province, but does not require renewable fuel to be supplied in any particular region. Fuel suppliers have the flexibility to vary their blend percentages and can choose where in the province they supply renewable fuel blends, so long as they meet the provincial annual average requirement for renewable fuel content. • There are two types of renewable diesel known to be supplied in British Columbia. Both are made from feedstocks that range from tallow and restaurant waste oil to canola.

o Biodiesel is a fatty acid methyl ester (FAME) made by chemically converting the feedstock into biodiesel. In order to meet the requirements of the Regulation, biodiesel must meet the ASTM D6751 Standard Specification for Biodiesel Fuel Blend Stock (B100) for Middle Distillate Fuels. o Hydrogenation-derived renewable diesel (HDRD) is made in a refinery by hydrogenating the feedstock and then processing the oil in a modified refinery process. The resulting fuel is a high-quality diesel fuel that meets all the specifications for petroleum diesel.

• Fuel labeling will ensure that consumers are provided with the information they need to make informed decisions about the appropriate fuel for their vehicle operating needs. The fuel labeling requirement will inform customers when fuels contain greater than the prescribed levels of

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ethanol or biodiesel. For more information regarding the labeling requirement, please see Information Bulletin RLCF-004 . • Lifecycle assessment is defined as a systematic set of procedures for compiling and examining the inputs and outputs of materials and energy and the associated environmental impacts directly attributable to the functioning of a product or service system throughout its lifecycle. • The low carbon fuel requirement will use a full life cycle or "well to wheel" approach to measuring GHG emissions. As such, it includes the GHG emissions from all of the activities involved - from the extraction of feedstock, to the production of the fuel, through to the use of the fuel. Typical life cycle stages include:

o upstream activities such as producing petroleum, or agricultural activities to grow and harvest crops; o midstream activities such as refining petroleum, or converting agricultural products into fuel, and transporting the fuels to markets; and, o downstream activities, including the end use (combustion) of the fuel in an engine. • Carbon intensity (CI) is the amount of carbon dioxide equivalent emitted per unit of energy consumed. It includes all of the carbon dioxide and other GHG emitted throughout the life cycle of a fuel. Renewable fuels generally have lower CI than non-renewable fuels. • For the carbon intensity table of some fuels identified in GHGenius, please see Fuel Carbon Intensities . • Each year fuel suppliers are required to ensure that their annual weighted average carbon intensity is below a required level. The following table and chart show the required carbon intensities from 2012 to 2020:

Table 4.2

Year Average Carbon Intensity Requirement (g/MJ ) 2012/13 90.21 2013/2014 80.79 2015 79.97 2016 79.15 2017 77.92 2018 76.69 2019 75.46 2020 73.82

(source: http://www.empr.gov.bc.ca/RET/RLCFRR/Pages/default.aspx )

• Fuel suppliers will be required to submit annual reports regarding the CI of the transportation fuels they supply. Suppliers who do not comply with the requirements will be subject to monetary penalties. The Province allows transfers of GHG credits between fuel suppliers to provide flexibility in meeting the requirements of the regulation.

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• For the Renewable Fuel Requirement, the penalty is calculated as the number of litres that a supplier falls short of the required volume multiplied by the penalty rate. The penalty rates are $0.30/litre for gasoline class fuel and $0.45/litre for diesel class fuel.

• For the Low Carbon Fuel Requirement, the penalty rate is $200/tonne of CO 2 equivalent emissions. For the purposes of complying with the Regulation, there are three different methods to determine the CI of a fuel. For details, please see Information Bulletin RLCF-006. • The reduction in CI can be achieved in a number of ways, including:

o Reducing the CI of the fuels currently supplied. This could be achieved through innovations in efficiency such as improving refining processes to reduce emissions or implementation of new carbon management practices such as carbon capture and storage; o Supplying more low carbon fuels, such as propane, natural gas, electricity or hydrogen, or renewable fuels like biodiesel or ethanol; and/or o Obtaining low carbon fuel credits from another supplier who supplies lower carbon fuels.

• For more information about the Regulation, email questions to: [email protected] .

To review what other Canadian provinces and the federal government are doing to promote renewable fuels for transportation in Canada, see:

Canada’s Renewable Fuels Regulation under the Canadian Environmental Protection Act Alberta’s Renewable Fuels Standard under the Climate Change and Management of Emissions Act Saskatchewan’s Ethanol Fuel (General) Regulation under the Ethanol Fuel Act

Manitoba’s Energy Development Initiative Ontario’s Ethanol in Gasoline Regulation under the Environmental Protection Act

To review what other US jurisdictions are doing, see: US Renewable Fuel Standard California’s Low Carbon Fuel Standard

4.1.2 Export Markets – Europe

(Source : European Union’s Renewable Energy Directive )

The European Union Directive on Renewable Energy sets targets for all Member States, so that the EU in total will reach a 20% share of energy from renewable sources by 2020 and a 10% share of renewable energy specifically in the transport sector. Energy from renewable sources is defined as energy from renewable non-fossil sources, namely wind, solar, aerothermal, geothermal, hydrothermal and ocean energy, hydropower, biomass, landfill gas, sewage treatment plant gas and biogases

Beside the RES (20%) and renewable energy for transport targets (10%), the directive sets the national renewable energy targets for all 27 members of the EU. The member states had to adopt national renewable energy action plans with binding targets for heating and cooling, electricity and transport biofuels from renewables by June 2010. It was up to member states to decide on the mix of contributions from these sectors to reach their national targets, choosing the means that best suit their national circumstances. National targets are outlined in Table 4.3.

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Table 4.3 National targets for the RES Directive

In terms of the projected split between renewable energy alternatives, Table 4.4 shows two scenarios (Baseline and Advanced), developed by the European Renewable Energy Council (EREC) and published in May 2011. As may be seen, bioenergy constitutes the largest contributing source throughout the forecast period.

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Table 4.4 Contribution of Renewable Energy Technologies to Final Energy Consumption (Mtoe)* *Mtoe – Millions of Tonnes of Oil Equivalent

The European Technology Platform on Renewable Heating & Cooling (RHC-Platform) brings together stakeholders from the biomass, geothermal and solar thermal sector, including the related industries, to define a common strategy for increasing the use of renewable energy technologies for heating and cooling. The following analysis was developed through the RHC Platform to identify sources and uses of biomass to meet EU targeted objectives.

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Table 4.5 Summary of Biomass/Bioenergy Targets (Mtoe)

As may be seen, import requirements grow very substantially over the forecast period, from 4.2 Mtoe in 2007 to 40 Mtoe in 2050. Since one toe (tonne of oil equivalent) has an energy density of 41.87 Gj and one tonne of dried biomass has an energy density of approximately 15.5 Gj/tonne, the biomass tonnage requirements for imports may be calculated as follows:

Table 4.6 Year Millions of Biomass Tonnes 2020 54 2030 81 2050 108

In 2011, Canada shipped about 1.1 million tonnes of wood pellets from British Columbia and about 120,000 tonnes from Nova Scotia and New Brunswick to Belgium, Denmark, the Netherlands, and the UK. A significant growth opportunity remains in the European sector.

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4.1.3 Export Markets - Asia

Traditionally, Asian export markets for Canadian wood pellets have been significantly smaller than their European counterparts, consisting primarily of shipments to Japan of 50,000 – 60,000 tonnes/year. Recent shifts in policies favoring renewable and low carbon energy sources in Korea and China are expected to increase demand for wood pellets within these countries. In Japan, expanding targets for biomass energy are also projected to increase import requirements.

In June 2011, Pöyry Management Consulting published a Strategic Position Paper for the Centre for Management Technology (CMT) titled Pellets Are Coming to Asia . Pöyry is a global consulting and engineering company focused on the fields of energy, industry, transportation, water, environment and real estate. The report may be downloaded at: http://www.cmtevents.com/eventposts.aspx?feedid=1218&ev=110917&

In December 2011, The International Energy Agency (IEA) published a report prepared by the Bioenergy Task 40 Team, titled Global Wood Pellet Industry Market and Trade Study . This report is available for download at http://www.bioenergytrade.org/downloads/t40-global-wood-pellet-market-study_final.pdf

According to the Pöyry report, Japanese energy strategy has been in limbo following the nuclear accident at Fukushima. The Japanese strategy included growth in the share of electricity generation through nuclear and renewables from 30% to 70% by 2030.

Figure 4.2 – Co-firing Facilities in Japan Source: IEA Task 40 Report Global Wood Pellet Industry Market and Trade Study

The bioenergy feed-in tariffs originally scheduled for implementation in 2012 were targeted to increase biomass-fuelled power capacity by 1,100 MW by 2020. In addition to the renewable energy targets, Japan

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has pledged to reduce CO 2 emissions to 30% below 1990 levels by 2030. According to the IEA study, approximately 40,000 tonnes of imported wood pellets were co ‐fired in 2008 and some 60,000 tonnes were used in 2010. The vast majority of wood pellets were imported from British Columbia, with minor amounts from China, Vietnam and New Zealand. The average price per tonne paid for Canadian wood pellets in 2009 was 129 Euros/tonne, not far off of the average ARA price for exports to Europe. According to the Pöyry report, the implications of the nuclear accident in Japan are more about timing than volumes. The biomass level for 2020 targeted in Japan’s strategy is equivalent to more than 4 million tonnes of pellets per annum. This will be partly supplied by wood chips, but an increasing number of end users are making clear their preference for pellets.

According to the IEA report, total wood pellet imports to Korea have almost tripled over the past three years, from a little over 7,000 tonnes in 2008 to more than 20,000 tonnes in 2010. Imports are currently supplied from China, Vietnam and Malaysia. Wood pellet prices for imported pellets typically vary from 90 ‐185 Euros/tonne. South Korea is the world’s tenth largest energy consumer, fifth largest oil importer and second largest coal importer. Sixty-four percent of electricity is produced from fossil fuels. South Korea is committed to a 30% reduction in CO 2 emissions by 2020. The government has instructed 374 of the country’s largest companies to commit to targeted emissions reductions to assist in meeting this goal. In addition, renewable portfolio standards for power generators are being implemented in 2012. Power companies must produce a minimum of 2% renewable energy in 2012, increasing by ½% per year until they are generating a minimum of 10% by 2020. South Korea currently uses some 75 million tons of coal per year. If 2% of this were converted to pellets by 2012 at a ratio of 1.5 tons of pellets per ton of coal replaced, this would mean a market of 2.25 million tonnes of pellets. According to the Korean Forest Service (KFS), the theoretical domestic maximum production potential in Korea could amount to about 1 million tonnes. The KFS projects a total demand of 5 million tonnes in 2020, which would still require imports of up to 4 million tonnes.

Figure 4.3 – Korean Wood Pellet Demand/Supply Source: IEA Task 40 Report Global Wood Pellet Industry Market and Trade Study

The wood pellet market in China is still in its infancy. According to the Pöyry report, China has established ambitious targets for pellet production and consumption. In March 2011, the 12th five year plan (2011-2015) was released. The Plan specifies the objective of utilizing 11.4% non-fossil fuels in primary energy consumption by 2015. In addition, CO2 emissions per unit of GDP are targeted to be cut

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by 17 percent. The long-term CO 2 target is a reduction by 40-45% per unit of GDP by 2020 as compared to the 2005 level.

4.2 Market Segments & Related Pricing – Densified Biomass

4.2.1 BC & Canadian Pellet Industry

As of 2011, Canada had 37 pellet plants with almost 3 million tonnes annual production capacity.

Table 4.7 Pellet Plants in Canada

Source: http://www.pellet.org/linked/2011-07-24%20g%20murray%20pfi.pdf

Western Canadian, production is focused primarily on overseas export. Pellets are loaded onto rail cars at the plant site and shipped by rail to Vancouver or Prince Rupert, where they are unloaded and stored temporarily at the terminal. From there, they are moved by bulk carrier to Europe or Asia. Table 4.8 shows the disposition of Canadian pellets in 2010/2011.

Table 4.8 Canadian Pellet Shipment (Tonnes)

Source: http://www.pellet.org/linked/2011-07-24%20g%20murray%20pfi.pdf

A recently compiled listing of pellet plants in BC is outlined in Table 4.9.

Table 4.9 BC Pellet Mills 2012 Name City Capacity (t/y) Highland Pellet Manufacturing Merritt 60-120,000 Okanagan Pellet Company Kelowna 50,000 Pacific Bioenergy Prince George 400,000 Pinnacle Pellet Armstrong Armstrong 50,000 Pinnacle Pellet Burns Lake Burns Lake 400,000 Pinnacle Pellet Meadowbank Strathnaver 200,000 Pinnacle Pellet Quesnel Quesnel 90,000

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Pinnacle Pellet Williams Lake Williams Lake 150,000 Pinnacle/Canfor Houston Pellet Houston 150,000 Premium Pellet Vanderhoof 140,000 Princeton Co-generation Princeton 90,000 Tahtsa Pellets Limited Burns Lake 80,000 Vanderhoof Specialty Wood Products Vanderhoof 30,000 BC Sub-total 1,890,000-1,950,000 Source: Canadian Biomass 2012 Pellet Map

4.2.2 US Pellet Industry

Until recently, the US wood pellet industry has developed as a niche segment within the overall residential heating market. According to the Pellet Fuels Institute (PFI) some 1 million U.S. homes are being heated by wood pellets. This domestic sector has shown little growth, as indicated by the following chart of US Hearth Appliance Shipments.

Figure 4.4 US Hearth Appliance Shipments 1998 - 2010

As the result of renewable energy initiatives, commercial/industrial CHP applications have been expanding based upon both federal and state incentives. In the electricity generation sector, statewide renewable portfolio standards (RPS), which require that a minimum percentage of electricity be renewable, have been effective in boosting renewable electricity production across the United States. According to the Energy Efficiency and Renewable Energy office of the U.S. DOE, there are currently 32 states plus the District of Columbia that have RPS policies in place, which account for more than half of the nation's electricity sales. Four additional states have nonbinding goals for adoption of renewable energy instead of an RPS. A list of these states with their RPS targets is outlined in Table 4.10.

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Table 4.10 – US States with RPS Targets State Amount Year Arizona 15% 2025 California 33% 2030 Colorado 20% 2020 Connecticut 23% 2020 District of Columbia 20% 2020 Delaware 20% 2019 Hawaii 20% 2020 Iowa 105 MW Illinois 25% 2025 Massachusetts 15% 2020 Maryland 20% 2022 Maine 40% 2017 Michigan 10% 2015 Minnesota 25% 2025 Missouri 15% 2021 Montana 15% 2015 New Hampshire 23.80% 2025 New Jersey 22.50% 2021 New Mexico 20% 2020 Nevada 20% 2015 New York 24% 2013 North Carolina 12.50% 2021 North Dakota* 10% 2015 Oregon 25% 2025 Pennsylvania 8% 2020 Rhode Island 16% 2019 South Dakota* 10% 2015 Texas 5,880 MW 2015 Utah* 20% 2025 Vermont* 10% 2013 Virginia* 12% 2022 Washington 15% 2020 Wisconsin 10% 2015

In most of these states, renewable electricity can be sourced from a combination of solar, wind, hydropower and various forms of biomass. In several states, power companies are allowed to meet renewable standards by cofiring biomass with coal at existing power plants, but it is unclear how many are actually doing so.

Although there is a significant market for wood pellets in the U.S., the largest market opportunity for wood pellets is in Europe. Pellet manufacturing in the southeastern (and more recently northeastern) US has been expanding rapidly to target this opportunity. According to an analysis by Wood Resources International released in April 2012, more than 2 million tons of wood pellets were shipped from North America in 2011, a 300 percent increase from 2008 and a new record. Although Canadian wood pellet

88 Options for Value-Added Processing of Coastal Forest Debris providers have historically been the major source of exports to Europe, this changed in the second half of 2011 when expanded investments brought on new capacity in the Southeastern U.S. According to the report, this new capacity now has the U.S. at the same export level as Canada.

4.2.3 Regional Markets - BC

At present, regional markets for wood pellet fuels are relatively small. Although climate change and sustainability awareness will cause some new commercial/residential/industrial developments to incorporate the use of biomass heating systems, much of the regional market potential will involve fuel switching from conventional fossil fuels, primarily coal, natural gas and heating oil. The same holds true for pyrolysis bio-oil products, but for these products, the relative lack of technology deployment and product standardization will result in slower market uptake. Of course, market uptake can be accelerated if the producers of these sustainable fuels also become major consumers. For the purposes of economic analysis, it is useful to determine the price for densified biomass and pyrolysis bio-oil products that provide equivalent value to conventional fuels on the basis of heating value.

Displacement of Commodity Coal

As shown in Table 4.11, coal use in BC is declining. BC does not use coal for electricity generation. As indicated in Table 4.12 industrial use across Canada, the dominant industrial end user of coal is the cement manufacturing sector. During the course of its investigations, Greenleaf contacted representatives from Canada Cement Lafarge in Richmond, BC. Responsible company executives indicated that Lafarge is seeking to displace the use of coal for both environmental and economic reasons.

Table 4.11BC Coal Consumption Kilotonnes 2006 663.8 2007 658.4 2008 579.6 2009 433 2010 426.4 CANSIM V54280255 http://www.statcan.gc.ca/pub/57-601-x/2011003/t119-eng.htm

Table 4.12 Aluminum Total Pulp and Iron and and non- Year Cement paper steel ferrous Industrial metal Canada - Annual Consumption - Kilotonnes 2003 x x x x 1,907.90 2004 x x x x 2,094.80 2005 x x x x 1,984.80 2006 x x x x 2,046.00 2007 x x x 1,207.50 2,131.50 2008 x x x 1,140.10 2,068.00 2009 x x x 953.2 1,584.20 2010 x x x 946.8 1,887.80 CANSIM V54278922 V54278923 V54278924 V54278925 V54278921

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Figure 4.6 shows average prices for thermal coal from producers in BC. Prices reported are geared primarily towards Asian export markets. As may be seen, prices for thermal coal dipped in 2009, in line with the worldwide economic slowdown. Prices recovered during 2011, but the BC MEMPR reports that prices have softened again in the early second quarter of 2012, averaging $90.00/tonne at the end of April.

Figure 4.5 Thermal Coal CAPP Price

Using the comparative pricepoint of $90.00/tonne, the equivalent prices for torrefied and standard pellets are calculated at $94.00/tonne and $62.00/tonne as shown in Table 4.13.

Table 4.13 Price Comparison vs Coal Thermal Coal Price April 2012 $90.00 $/Tonne Thermal Coal Heating Value* 22.5 Gj/Tonne Torrefied Pellets Heating Value* 23.5 Gj/Tonne Ratioed Price Torrefied Pellets $94.00 $/Tonne Standard Pellets Heating Value 15.50 $/Tonne Ratioed Price Standard Pellets $62.00 $/Tonne

* Approximate values. Heating values will vary with the characteristics of biomass feedstock and torrefaction processing. Heating values of thermal coals will vary with source.

Displacement of Natural Gas – Large Commodity Users

In British Columbia, large consumers of natural gas have the option of purchasing pipeline commodity gas from registered brokers and paying the regional gas utility a regulated tariff to transport the gas for delivery through the local distribution infrastructure. For customers on the lower mainland and Vancouver Island, the reference pricing point for commodity supply is Huntington/Sumas. From this point, the delivery tariff through the local Fortis pipeline network is approximately $1.14/Gj to lower mainland customers. Although unbundled transportation services are being provided to the Island Cogeneration Plant (Campbell River) and to cogeneration facilities at pulp mills on the island, this option is not generally available to other consumers of natural gas on Vancouver Island. Minimum consumption required under Transportation Rate 22 is 12,000 Gj/month. Other transportation options are available

90 Options for Value-Added Processing of Coastal Forest Debris under rate schedule 27 (12,000+ Gj/month interruptible); schedule 23 (2,000+ Gj/yr) and schedule 25 (6,000 Gj/yr)

Table 4.14 shows average monthly commodity gas prices at Huntington/Sumas from January 2011 through February 2012. The average gas price over this period was $3.92/Gj. Adding the transportation charge of $1.14/Gj results in a benchmark price for large end users on the lower mainland of $5.07/Gj. On an energy equivalent basis, this translates into prices for torrefied pellets of $119.08/tonne and for standard pellets of $78.54/tonne.

Table 4.14 Pellet Pricing Comparison to Natural Gas Huntington/Sumas Transfer Point Weighted Average Gas Commodity Prices* Time Period USD Cost/MMBTU CAD Cost/Gj February 2012 Totals: $2.59 $2.73 January 2012 Totals: $2.91 $3.07 December 2011 Totals: $3.59 $3.79 November 2011 Totals: $3.70 $3.90 October 2011 Totals: $3.31 $3.49 September 2011 Totals: $3.75 $3.96 August 2011 Totals: $3.80 $4.01 July 2011 Totals: $4.00 $4.22 June 2011 Totals: $4.24 $4.48 May 2011 Totals: $4.03 $4.25 April 2011 Totals: $4.04 $4.26 March 2011 Totals: $3.81 $4.02 February 2011 Totals: $3.99 $4.21 January 2011 Totals: $4.29 $4.53 Average $3.92 Approximate Transportation Tariff/GJ ** $1.14 Subtotal /Gj $5.07 Equivalent Price for Torrefied Pellets per Tonne (23.5 Gj/tonne) $119.08 Equivalent Price for Standard Pellets per Tonne (15.5 Gj/tonne) $78.54 * Source NGX Spectra data. Fortis http://www.ngx.com/marketdata/NGXSHUPI.html ** Source: Fortis Rate Schedule 22 – Large Volume Transportation

Displacement of Natural Gas – Smaller Industrial & Commercial Consumers

For medium-sized commercial/industrial gas consumers on Vancouver Island that do not meet the volume criteria required to justify direct commodity purchases, the regulated Fortis Large Commercial Rate 3 tariff structure will typically apply. This rate bundles together both commodity and delivery charges into a significantly larger charge per Gj of gas used. As shown in Table 4.15, the calculated prices for torrefied and standard pellets on an equivalent heating value basis are $290.07/tonne and $191.32/tonne respectively.

For the Commodity Coal and Large Commodity Gas segments, it was assumed that one or two customers could absorb all of the production from a pellet mill of the scale contemplated in this analysis. For the Smaller Industrial/Commercial segment, it is assumed that a distributor will be required to provide

91 Options for Value-Added Processing of Coastal Forest Debris marketing and distribution. If a 40% margin is allowed for one or more distribution partners, the net plant gate prices calculated for torrefied and standard pellet products in this sector net down to $174.04/tonne and $114.49/tonne respectively.

Table 4.15 Vancouver Island - Large Commercial Rate 3 Current Vancouver Island and Sunshine Coast service area (Effective January 1, 2012) Basic charge per day $6.62 Charge for gas used per GJ $12.02 Example: how to calculate a monthly bill Average monthly consumption Gjs 625 Basic charge $205.24 Charge for gas used $7,509.38 Total monthly bill $7,714.62 Total Cost of Gas Used per Gj $12.34

Equivalent Cost for Torrefied Pellets per Tonne $290.07 Equivalent Cost for Standard Pellets per Tonne $191.32 Less Distributor 40% Margin Torrefied Pellets $174.04 Less Distributor 40% Margin Standard Pellets $114.79

Adjustments for Carbon Tax Impact & Incentives

As noted in Section 4.1.1, BC has implemented a Carbon Tax that is designed to discourage the use of environmentally unfriendly fossil fuels. Table 4.16 calculates the carbon tax that would be applied to conventional fossil fuels on an energy equivalent basis. Since this tax is not applied to sustainable biomass fuels, the savings may be added to the benchmark prices that equate densified biomass prices to their conventional fossil fuel equivalents.

Standard biomass pellets may be co-fired with coal in proportions up to 15% without requiring significant investments in infrastructure. Large coal consumers are generally seeking cost-effective ways to reduce their GHG footprint. As a result, no price incentive to integrate densified biomass into the fuel mix is assumed. In the large natural gas commodity segment, investments in combustion systems will be required. Regional natural gas prices have been depressed by a supply glut arising from the inability to transport natural gas resources to high value offshore markets. A number of LNG export terminals are being planned for the west coast of North America to open access to these high value markets. Many analysts predict that regional gas prices will rise sharply once these terminals are in place. Large energy consumers such as pulp mills will often hedge their bets by installing dual combustion systems for natural gas and biomass. For large consumers of commodity gas, a 5% price incentive is assumed to encourage market penetration. A similar logic may be applied to the smaller gas consumer purchasing at bundled rates from the gas utility. In order to recognize differences in economies of scale, a 10% discount is assumed for this market segment.

The application of adjustments for the carbon tax and for conversion incentives results in the net prices shown in the “Adjusted Price/Tonne column in Table 4.16. For the purposes of assessing the economics of potential densified product pathways, these prices will be used as benchmarks for the market segments considered (see Section 5 following).

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Table 4.16 Potential Impact of Carbon Tax (BC Markets Only) Equivalent Price to Consumer Equivalent Applicable Adjusted Displaced Conventional Incentive Price/Tonne Carbon Tax* Price/Tonne Fuel Discount Before Carbon on Fossil Fuel to Inc'l Carbon

Tax Equivalent Convert Tax & Discount

Standard Pellets vs Coal $62.00 $42.96 0% $104.96 Torrefied Pellets vs Coal $94.00 $65.13 0% $159.13 Standard Pellets vs Natural Gas - Commodity $78.54 $23.19 5% $96.65 Torrefied Pellets vs Natural Gas - Commodity $119.08 $35.17 5% $146.54

Standard Pellets vs Natural Gas - Bundled Rate $114.79 $23.19 10% $124.19 Torrefied Pellets vs Natural Gas - Bundled Rate $174.04 $35.17 10% $188.29

*2012 Carbon Tax

Assumed

4.2.4 Export Markets

While export markets in Asia hold significant promise, the vast majority of pellets produced in BC are exported to Europe. No export markets for pyrolysis oil products have yet been developed.

In Europe, import pellet prices are tracked and published by ENDEX. ENDEX is one of Europe’s most experienced energy exchanges, operating spot and futures markets in the Netherlands, the United Kingdom and Belgium.

The average price for industrial pellets in March 2012 CIF Amsterdam/Rotterdam/Antwerp (ARA) is reported as approximately 135 Euros/tonne. Assuming an exchange rate of 1.31 CAD/Euro, this translates to a price of $177.39 delivered to port. No price has yet been established for torrefied pellets, but a price may be estimated by equalizing the cost per Gj between standard and torrefied pellets. Assuming relative heating values of 15.5 Gj/tonne for standard pellets and 23.5 Gj/tonne for torrefied pellets, the calculated price equivalent price for torrefied pellets CIF ARA would be $268.95/tonne. This calculated price for torrefied pellets should be conservative. Torrefaction increases energy density, grindability, shelf life and combustion efficiency. Depending upon competitive factors, a premium price may be justified.

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Figure 4.6 ENDEX Industrial Wood Pellets pricing (Euros/Tonne CIF ARA)

Month Quarter Calendar

Transportation costs from BC to ARA ports are estimated at $77/tonne. Subtracting this factor from European delivered prices/tonne yields a plant-gate price in BC of $100.39/tonne for standard pellets and $191.95/tonne for torrefied pellets. These prices will be used as benchmarks in assessing export market options for potential implementation pathways involving torrefied and standard pellet pathways (see Section 5 following). Table 4.17

Standard Pellets - European Market Price for Industrial Pellets CIF ARA 135.0 Euros - ENDEX March 2012 Assumed Exchange Rate 1.31 CAD per Euro Revenue per Tonne CAD $177.39 CAD/Tonne Total Tonnes 46,847 Tonnes/Yr Torrefied Pellets - European Market Heating Val Untorrefied (BBRG Report) 15.5 Gj/T Heating Val Torrefied (BBRG Report) 23.5 Gj/T Ratio 1.52 Torrefied/Untorrefied Ratio(ed) Revenue per Tonne $268.95 CAD/Tonne CIF ARA Total Tonnes 39,600 Tonnes/Yr Transportation Costs (Netherlands) per Tonne USD Transport to Vancouver Port $21.50 $USD/Tonne Transfer, Storage & Loading $10.50 $USD/Tonne Vancouver Port to Dutch Port ARA $45.00 $USD/Tonne Transport Cost FOB Dutch Port ARA USD $77.00 $USD/Tonne Assumed Exchange Rate $1.00 CAD per USD CAD Cost per Tonne $77.00 CAD Cost per Tonne

Plant Gate Net per Tonne Standard $100.39 CAD/Tonne Pellets Plant Gate Net per Tonne Torrefied $191.95 CAD/Tonne Pellets

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4.3 Market Segments & Related Pricing – Pyrolysis Bio-Oil

4.3.1 Potential Fuel Markets & Applications

Due to its high oxygen content and the presence of a significant portion of water, the heating value of pyrolysis oil is much lower than for fossil fuel, 16–19 MJ/kg compared to 40 MJ/kg, respectively [Czernik & Bridgwater, 2004]. However, flame combustion tests show that fast pyrolysis oils can replace heavy and light fuel oils in industrial boiler applications [ Venderbosch & Prins, 2010 ]. The production of electricity from pyrolysis oil is more advantageous than the production of heat because of the higher added value of electricity, and its ease of distribution and marketing.

Orenda Division of Magellan Aerospace Corporation (Canada) is actively searching for opportunities to run their Orenda GT2500 (turbine) on pyrolysis oils. The GT2500 uses diesel oil and/or kerosene and an external silo-type combustor. It is anticipated that 50 tonnes per day of BioOil (Dynamotive) will fuel the gas turbine, generating up to 2.5 megawatts of electricity - enough to supply 2,500 households. Erie Flooring, who provides the wood residue from its operations to produce BioOil, will utilize the electricity produced from the turbine to power its mills and generate steam to heat its lumber kilns. Electricity exceeding the needs of Erie Flooring will be exported to the Ontario Energy grid. In March, 2006 the government announced that Ontario Power Authority would purchase electricity produced by biomass, wind, and small hydro for $0.11/KWh. Based on a model by Dynamotive, the purchase price amounts to $7.74/GJ [Bradley, 2006, Lupandin et al., 2005; Venderbosch & Prins, 2010] .

Pyrolysis oil can be co-fired in coal plants. In June 1997, Manitouwoc Public Utilities of Wisconsin, USA conducted a commercial trial of co-firing pyrolysis oil with a 20 MW coal-fired stoker boiler to generate power. The pyrolysis oil was RTP TM oil from Ensyn. The boiler was modified and during firing it was found that the PyOil provided 5%, or 1 MW, of the 20 MW output. The test took place over one month for 370 hours. No detrimental effects to performance were found and the sulfur emissions were down 5% [Bradley, 2006, Venderbosch & Prins, 2010 ]. Pyrolysis oil can also be co-fired in oil plants or with natural gas. A successful co-firing test with 15 tons of pyrolysis oil was conducted in 2002 in a 350MWe natural-gas fired power station in the Netherlands [ Venderbosch & Prins, 2010; Wagenaar et al., 2002]. While co-firing pyrolysis oil in the boiler, the power output, 250 MWe, remained constant. Since, 2006 BTG has been involved in the research of pyrolysis oil combustion in a standard 250 kW hot water generation unit to replace diesel and natural gas

A Red Arrow Products pyrolysis plant in Wisconsin, dedicated to food flavoring regularly uses pyrolysis oil to generate heat commercially (10 years) in a 5 MW swirl burner. In 2006, Dynamotive BioOil was used in a combustion test to replace fuel oil #6 (Bunker C) at Great Lakes Greenhouses Inc. in Leamington, Ontario. The test ran successfully for four hours. Dynamotive BioOil was also used to replace heating oil #2 in a furnace at one of Alcoa’s largest aluminum plants in Baie Comeau, Quebec [Bradley, 2006]. Similarly, in 2004 pyrolysis oil was tested at Top Gro Greenhouse in Aldergrove, BC. The pyrolysis oil was used as a substitute for #6 fuel oil. The pyrolysis oil was fired in a standard industrial 100 psig Cloverbrook hot water fire tube boiler. One tonne of pyrolysis oil was fired and maintained the heat requirements for several hours [Bradley, 2006].

One key market in Canada for pyrolysis oil is in lime kilns at chemical pulp mills. A typical 900 tpd pulp mill uses 60 million cubic feet million cubic feet (MCF) of natural gas per hour in its lime kiln or 1.6 GJ/t pulp. Thus, pulp mills require 19.2 million GJ of energy to fuel lime kilns. Pyrolysis oil has an energy content of approximately 17.8 GJ/t. It is likely that early pyrolysis oil plants could be located near pulp mills, which are also biomass sources. The potential for usage at mills is competitive with fossil fuels when the delivery cost is factored in [Bradley, 2006].

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A combustion test using pyrolysis oil to dry lumber was carried out in BC during 2004 at a Canfor sawmill. Two loads of lumber were dried in two separate runs. In the first run, 9,987 kg of pyrolysis oil made from whitewood and bark was used to dry 396 m 3 of lumber over 46.9 hrs reducing the moisture from 42 to 12.8%. In the second run, 8,501 kg of oil was used to dry the same volume over the same time from 46-15.4 %. Overall, the pyrolysis oil exhibited good ignition as an effective substitute for gas. Therefore, markets are available for sawmills that have drying kilns and use natural gas or heavy fuel oil as a fuel for onsite drying [Bradley, 2006].

Pyrolysis oils can also be used as a feed for gasification. Use of the oil in entrained flow gasification is the main application FZK is aiming at. In 2005, they successfully converted pyrolysis oil to syngas [Henrich et al., 2009; Venderbosch & Prins, 2010] . Consequently, a new biomass to liquid process to produce tar free syngas from char and oil was developed. Syngas can then be converted to synthetic diesel, methanol and other chemicals [Higman & Van der Burgt, 2003; Venderbosch et al., 2002; Venderbosch & Prins, 2010] .

As future applications allow for co-burning pyrolysis oil/diesel mix in stationary engines without significant modifications, petroleum prices rise, and environmental concerns increase, pyrolysis oil represents an attractive alternative for fossil fuel. The most attractive use of pyrolysis oil is as a feedstock for the production of transportation fuel. The simplest use of pyrolysis oil may be in diesel engines, but the oil may not be suitable for a stationary diesel engine. Large and medium diesel engines are relatively insensitive to the contaminants present in pyrolysis oils. Successful tests using pyrolysis oil in diesel engines have been performed by diesel (re)manufacturers like Ormond Diesel (Germany) and Wartsila Diesels (Finland), Pasqualo/Lombardini (Italy), and Sener-Tec (Germany) in collaboration with research institutes such as Aston University, VTT, MIT, and the University of Rostock [Baglioni et al., 2001; Bradley, 2006; Chiaramonti et al., 2007; Jay et al., 1995; Kindelan, 1994; Venderbosch & Prins, 2010; Venderbosch & Van Helden, 2001 ].

Upgrading of the pyrolysis oil to products more appropriate for further use is being considered by many organizations and institutes including Dynamotive and Envergent (Ensyn). Pyrolysis oils can be upgraded, by removing the oxygenated compounds and hydrogenating the hydrocarbon molecules [Elliott, 2007; Venderbosch & Prins, 2010] . This can be accomplished either atmospherically with use of a conventional FCC catalyst in the pyrolysis process or at elevated pressures, by hydrotreating [Adjaye & Bakhshi, 1995a; Adjaye & Bakhshi, 1995b; Horne & Williams, 1996; Samolada et al., 1998; Venderbosch & Prins, 2010] .

4.3.2 Potential Bio-Oil Product Pricing – Coastal BC

In the study by Sorenson referenced in Section 3.3.10, it was assumed that raw pyrolysis oil can displace No. 2 Fuel Oil in boilers, lime kilns, and similar industrial applications. That study assumed that raw pyrolysis oil has an energy content of ~57% of No. 2 F.O. and that a 10% discount would be required as an incentive for consumers to switch fuels and to pay for upgrades to burners, etc. That meant that the average price for No. 2 F.O. of US$2.64/gal. (~$0.697/litre) became a pyrolysis oil price of US$1.36/gal. (~$0.359/litre). The Sorenson study also assumed the price of biochar at US$136/ton (~$0.15/kg).

The monthly average retail price for diesel fuel and furnace oil (also known as No. 2 Fuel Oil) at selected BC locations as compiled by Kent Marketing Services for the last 14 months is shown in the Figures 4.8 and 4.9.

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2011/12 Selected BC Diesel (Retail) Prices

160.0

140.0

120.0

VANCOUVER VICTORIA 100.0 PRINCE GEORGE KAMLOOPS KELOWNA 80.0 FORT ST. JOHN Diesel (Retail) Price Diesel (Retail) (cents/litre)

60.0

40.0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb

Figure 4.7

2011/12 Selected BC Furnace Oil (Retail) Prices

160.0

140.0

120.0

100.0

VANCOUVER

80.0 VICTORIA PRINCE GEORGE KAMLOOPS 60.0 Furnace OilFurnace Price (cents/litre) (Retail)

40.0

20.0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb

Figure 4.8

The corresponding rack (wholesale) prices for these fuels over the same 14 month period are shown in Figures 4.10 and 4.11.

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2011/12 Selected BC Diesel (Rack) Prices

120.0

110.0

100.0

90.0

80.0

70.0 KAMLOOPS VANCOUVER NANAIMO Diesel (Rack) Price (cents/litre) Diesel (Rack) 60.0

50.0

40.0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb

Figure 4.9

2011/12 Selected BC Furnace Oil (Rack) Prices

120.0

110.0

100.0

90.0

80.0

70.0

60.0 KAMLOOPS VANCOUVER 50.0 NANAIMO

Furnace Oil (Rack) Price Oil(cents/litre) Furnace (Rack) 40.0

30.0

20.0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb

Figure 4.10

It should also be expected that a major industrial user of diesel fuel or fuel oil would have sufficient leverage to negotiate a long term supply contract at a price below retail and close to rack. The terms of such contracts are undoubtedly confidential and commercially sensitive for both parties and therefore not publically available.

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If we apply the Sorenson methodology and allow for the Vancouver Island price to be somewhat higher than Vancouver (see above) and allow for a small discount from a rack price of ~$0.918, a reasonable proxy for the value of raw pyrolysis oil at a DLS on Vancouver Island at this time would be ~CA$0.47/litre.

In general terms most industrial fuel users prefer to buy No. 6 Heavy Fuel (HFO) oil which is higher in sulphur that No. 2 F.O., but less expensive. As a result a second approach to estimating the value of raw pyrolysis oil is to examine the market price of HFO.

As described in section 4.3.1, raw oil from most pyrolysis processes has an energy content of ~18 Mj/kg or ~45% of that of the ~40 Mj/kg for heavy fuel oil (HFO). Pyrolysis oil has been successfully used as a fuel in industrial boilers, although only on a trial basis to date due to the limited supply available. As noted earlier, raw pyrolysis oil has several undesirable properties, including acidity and limited storage stability, but its sulphur content is essentially zero and it is generally regarded as nearly GHG neutral. Accordingly, it seems reasonable to assume that if a significant quantity of raw pyrolysis oil becomes available it should be worth ~50% of the price of HFO at the point of consumption.

Unfortunately existing petroleum price tracking services, such as the Kent database, do not monitor and report on HFO. However, the Manufacturing, Construction and Energy Division of Statistics Canada has published a review of heavy fuel oil consumption in Canada which provides some useful information [StatsCan 2009]. For example, the StatsCan report lists the value of various petroleum products relative to crude oil as shown in Table 4.18.

Table 4.18

Product Value as percent of crude oil feedstock 1 Premium gasoline 124 Regular gasoline 115 Ultra low diesel 133 Regular diesel 126 Home heating oil 123 Butane 83 No. 6 HFO: 1% sulfur 68 No. 6 HFO: 3% sulfur 63 1. Using West Texas Intermediate Cushing Crude as base of 100%.

Source: StatsCan, Heavy Fuel Oil Consumption in Canada

The report goes on to note that while in 2005 only ~4.1% of the national energy demand was supplied by HFO, the pulp and paper sector is a large industrial consumer where in 2005 it accounted for ~5.3% of total energy supply, down from ~12.4% in 1990.

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Figure 4.11

The StatsCan report does not provide a breakdown of HFO price or volume data by province. Accordingly, for the purposes of this study the authors have assumed that the national picture portrayed by StatsCan applies without modification to the BC Coast. In the absence of contradictory information the authors also assume that major industrial fuel users, such as the pulp mills in the Nanaimo (Harmac) and Port Alberni (Catalyst) areas, consume HFO in their boilers and would be willing to consume raw pyrolysis oil if it was available in sufficient quantity and at an attractive price.

On this basis the apparent value of raw pyrolysis oil to an industrial consumer on the BC Coast should be comparable to that of No. 6 HFO (1% sulphur) or ~70% of crude oil taking into account the relative properties and possible need for boiler upgrades. Although no publically available data could be found for the price of crude oil on the Coast, the StatsCan report lists the price of regular diesel fuel at ~126% of the cost of crude oil. Assuming that this relationship holds true for the BC Coast, and that the current Nanaimo rack price for diesel of ~91.8 cents/litre can be substituted (see chart above), the implied value of crude oil in the vicinity is ~72.9 cents/litre, the implied value of HFO is ~51.0 cents/litre and the implied value of raw pyrolysis oil would be ~20.4 cents/litre, assuming no transportation cost differentials.

For the purposes of this study if the two different approaches to establishing a market value are combined, the result is a price range for raw pyrolysis oil on the BC Coast is CA$0.20 - $0.47/litre at the point of consumption. To be conservative and to provide the pyrolysis oil producer with the largest incentive to upgrade, it is reasonable to assume a base case value for raw pyrolysis oil of ~$0.30/litre at the point of production.

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5. Profiling of Potential Pathway Opportunities

5.1 Opportunity Profiling – Torrefaction & Densification Systems

In sections 3.1 and 3.2, generic input/output factors and economics for torrefaction/densification were provided based upon published research, papers and presentations. This information is evolving rapidly as torrefaction/densification technologies continue down the pathway of development and deployment. To provide the best analysis, a custom developed model which incorporates the most current technology/economic parameters and allows for the tailoring of key input assumptions is required.

To provide this capability for the current project, Dr. Shahab Sokhansanj, project leader for the BBRG team, developed a spreadsheet-based model for a torrefied pellet operation with an output of 5 tonnes/hr (120 tpd) which incorporates information derived from both published sources and from research undertaken at the University of British Columbia. This tool allowed Greenleaf to customize key input assumptions so that they match WFP parameters in critical areas such as feedstock costs and logistics, operating rates, labour rates, electricity costs, etc. The model was used to profile four potential technology pathways:

1. Torrefied pellets 2. Standard pellets 3. Torrefied briquettes 4. Standard briquettes

Across four potential end use market segments:

1. Export markets in Europe 2. Large regional users of commodity thermal coal 3. Large consumers of natural gas (purchasing commodity gas and transportation services independently) 4. Smaller regional industrial/commercial users of natural gas (purchasing bundled gas and delivery from Fortis BC)

For torrefied pellets, results were developed by Greenleaf using the fully integrated model developed by Dr. Sokhansanj. For briquetting options, capital and operating costs associated with the pellet mill were eliminated and capital/operating costs for Nielsen and RUF briquetting systems (as provided by manufacturers’ representatives) were substituted. For standard (untorrefied) pellet and briquetting options, capital and operating costs for the torrefaction system were eliminated. The net product yields were increased and product energy densities were decreased to reflect standard product parameters.

Detailed results of the economic analyses incorporating company-specific inputs are confidential to WFP. In general terms all torrefied product options produced positive financial results. All standard product options, with the exception of the Bundled Natural Gas market segment, produced marginal or negative results. Specifically, for torrefied pellets the IRRs calculated for export to Europe and for displacement of bundled natural gas were most attractive, whereas the results for displacement of coal and for displacement of commodity natural gas were somewhat less attractive. In comparison, production of standard wood pellets produced an attractive IRR for displacement of bundled natural gas but all other cases produced negative or marginal results. Two briquetting technologies were evaluated, each for

101 Options for Value-Added Processing of Coastal Forest Debris torrefied and standard wood feedstocks. With only a sight difference between them, both yielded attractive IRRs for torrefied products/markets, but only marginal or negative returns for standard products/markets. Conclusions arising from these analyses are outlined in Section 8 of this report.

5.2 Opportunity Profiling – Pyrolysis Bio-Oil Systems

In Section 3.3, generic input/output factors and economics for pyrolysis/bio-oil technologies were reviewed based upon published information sources. As with torrefaction/densification, the confirmation of actual economics will require further deployment of the various technology options at commercial scale.

For the purposes of this study, proprietary models provided by pyrolysis technology developers were used in conjunction with confidential WFP cost inputs and logistical parameters to develop pro-forma economics for:

1. A 300 tonne/day (tpd) system incorporating a Tolero Energy LLC solvent extraction system producing a premium liquid fuel product, an aqueous phase by-product, and a marketable bio- char co-product 2. 50 tpd and 100 tpd systems incorporating technology configurations from three well known pyrolysis technology developers. These systems produce unrefined bio-oil outputs with a carbon bio-char co-product.

Using these models, base case economics were projected under the following plant gate market price scenarios:

1. $0.73/litre for Tolero Premium Fuel. $1.00/US Gallon ($0.38/litre) for the Tolero aqueous phase by-product 2. $0.40/litre for unrefined bio-oil produced by the three conventional pyrolysis technologies 3. $150/tonne for carbon bio-char produced by all technology options.

Details of the proprietary models used are confidential to the technology developers participating in the study. The detailed economic projections incorporating company-specific inputs that were generated using these models are confidential to WFP. For the Tolero solvent process, the base case using WFP biomass costs combined with capital and operating costs provided by the developer and augmented with added balance of plant data developed by Greenleaf, resulted in attractive economics. Sensitivities to various input and product prices were calculated with the result that economics were generally robust throughout. For the conventional pyrolysis processes, model runs for the 50 tpd system provided marginally attractive economics. Results for the 100 tpd configurations produced attractive and more robust economics for two of the three technology options examined. Summary conclusions arising from these analyses are outlined in Section 8 of this report.

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6. Environmental Impact Analysis

6.1 Base Case Analysis

The reader should note that the Greenhouse Gases (GHG’s) and Criteria Air Contaminants (CAC’s) emissions estimates in this section of the report, while believed to be accurate, are mathematical calculations based on the best available information which are detailed here only to present a complete picture of the impact of current practices. With particular reference to the GHG values from burning slash piles, it should be noted that according to the protocols established by the Intergovernmental Panel on Climate Change (IPCC) these emissions are regarded as non-anthropogenic and therefore are not counted. The issue of net GHG emissions charged against a fuel derived from logging debris that is recovered and converted to fuel will be dealt with in more detail in section 5.3 of this report.

Using the emissions factors published by the B.C. Government, supplemented with procedures from the U.S. Forest Service, the estimated emissions avoided by not burning 800,000 Gt/yr (400,000 BDt/yr) of logging debris amount to ~336,864 tonnes/year of GHG’s plus ~36,960 tonnes/year of CAC’s. Emission factors are shown in Table 6.1.

Table 6.1

Emission Factors for Wood GHG's (g/kg) Item CO2 CH4 N2O eCO2

Wood waste* 950 0.05 0.02 957

CAC's (g/kg) Item CO NOx SOx VOC PM total PM10 PM2.5 Total CAC

Slash piles** 85 1.7 0.05 4 14.25 9.5 8.88 105.0

Proportion of mass 88% consumed by fire***

* Source: BC Emission Factors for Fuels ** Source: 2000 British Columbia Emissions Inventory of Criteria Air Contaminants: Methods and Calculations, BC Min. of Water, Land and Air Protection, revised June 2005. *** Source: Guidelines for Estimating Volume, Biomass and Smoke Production for Piled Slash, Colin Hardy, USDA Forestry Service, 1996.

Assumptions: all debris generated in woods is piled and burnt all debris generated at DLS sites is currently either ground and sold as hog fuel or landfilled GHG and CAC emissions from landfilled debris are ignored for the purposes of this study

6.2 Incremental Value-Added Processing Analysis

A noted in section 6.1, according to accepted protocols developed by the Intergovernmental Panel on Climate Change (IPCC), the avoided GHG emissions ~336,864 tonnes/year from not burning slash piles are regarded as non-anthropogenic and therefore are not counted for the purpose of allocation to any fuel derived from logging debris. The avoided CAC emissions of ~36,960 tonnes/year are not considered by the IPCC in such calculations.

The incremental emissions associated with grinding and trucking debris can be estimated using available factors for liquid fuels such as published by the B.C. Government. Table 6.2 lists the GHG emission factors for fuels such as diesel in both on-road and off-road applications.

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Table 6.2

BC Emission Factors for Fuels (g/L) Fuel Application CO2 CH4 N2O eCO2

Propane Residential 1,510 0.027 0.108 1,544 Natural gas Industrial 1,916 0.037 0.033 1,927 Gasoline Onroad 2,289 0.12 0.16 2,341 Gasoline Offroad 2,289 2.7 0.05 2,361 Diesel Onroad 2,663 0.12 0.082 2,691 Diesel Offroad 2,663 0.15 1.1 3,007 Light Fuel Oil Industrial 2,725 0.006 0.031 2,735 Heavy Fuel Oil Industrial 3,124 0.12 0.064 3,146

Source: BC Emission Factors for Fuels

Combining the base case incremental emissions from grinding and trucking results in an average net increase of ~10.2 kg/Gt of GHG’s as per the IPCC rules. There are not expected to be significant incremental emissions of CAC’s arising from grinding and hauling operations.

As detailed elsewhere in this report, the developers of both pyrolysis and torrefaction technologies do not appear to have included such essential pre-processing unit operations as screening, loading, drying, fine grinding and utilities for lighting and controls. The authors estimate the incremental GHG emissions associated with these activities to be ~5.25 kg /Gt as shown in Table 6.3.

Table 6.3

Estimated Preprocessing GHG Emissions Attributable to Fuels Woods Only (assumes 300 ton/day Tolero plant or 217,443 G tonnes/year biomass feed) Ratio Unit Operation Fuel Use Annual Units Factor* Total (kg/Gt) Preprocessing (t/y) screening diesel 10 L/h 79,200litres/yr 3,007 238.2 1.10 fine grinding electricity 420 hp 2,481,494kWh/yr 0.17 421.9 1.94 loading diesel 18 L/h 142,560litres/yr 3,007 428.7 1.97 drying biomass 0 0.0 0.00 lighting & controls electricity 40 kW 316,800 kWh/yr 0.17 53.9 0.25 S/T Preprocessing 1,142.5 5.25

* Note: electricity factor of 0.170 tonnes/MWh is taken from Environment Canada's National GHG Inventory Report 19902006, Annex 9, Table A911, Electricity Generation for BC

Since both pyrolysis and torrefaction technologies are currently immature with no commercial scale plants are in operation, the authors are unable to make a distinction between them in terms of pre- processing energy requirements and incremental emissions. Accordingly, it is assumed that pre- processing emissions are identical per unit of feed mass. This assumption will need to be revisited once demonstration plants are in operation.

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6.3 Environmental Profile of Potential Products

In order to develop a preliminary profile of the GHG content of a fuel derived by pyrolysis, it is necessary to base the estimates on comments provided by Tolero which are the most detailed data available to the authors. The following key factors were considered:

the mass yield of initial products from pyrolysis (i.e. before solvent condensation and extraction) is 15% Syngas, 70% PyOil and 15% Char; accordingly incremental processing emissions will be allocated on a weight basis

it is claimed that the pyrolysis process is essentially autothermal, deriving all necessary heat from combustion of the syngas; however, a net 700 BTU/lb or 1.63 Gj/ODt is required and assumed to be supplied by electricity

For torrefaction, the authors relied on the detailed process model created by UBC which includes pelleting equipment. That model predicts near autothermal operation for heat but requires electricity input of 985 kW for a 5.0 tonne/hour product output.

Based on these factors the estimated Downstream processing energy requirements and associated GHG emissions are shown in Table 6.4. Table 6.4

Estimated Processing GHG Emissions Attributable to Fuels Woods Only

Process Fuel Use Annual Units Factor Total (kg/Gt) Pyrolysis pyrolyser (50 t/d) electricity 1.63 Gj/ODt 7,458,948 kWh/yr 0.17 1,268.0 0.035

Torrefaction torrefier (5 t/h out) electricity 985 kW 7,801,200 kWh/yr 0.17 1,326.2 0.018

Combining the Upstream and Downstream components the average emissions profiles for pyrolysis is 15.54 kg/Gt and for torrefaction is 15.52 kg/Gt. There is very little difference between the pyrolysis and torrefaction processes when expressed in units of kg/Gt of feed biomass since the overall profiles are dominated by the grinding and trucking incremental emissions.

The calculated emissions attributable to the liquid pyrolysis fuel is in the 294.0 – 360.2 g/litre range which compares quite favourably to conventional diesel fuel at 3,007 g/litre for off road use (i.e. an 88%- 90% reduction per litre assuming equivalent energy content). Likewise for torrefaction, the calculated emissions attributable to the solid densified fuel is in the 27.0 – 33.1 g/kg range which also compares quite favourably to coal at 1,770 – 2,430 g/kg (i.e. an 98% -99% reduction per kilogram assuming equivalent energy content) as compiled by Environment Canada in its National Inventory Report 1996- 2006 in Annex 12, table A12-5 for BC.

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7. Government Funding & Incentive Programs

A range of federal and provincial funding programs can provide up to 75% of the funding required to implement innovative clean energy projects. Typically, funding is provided for activities related to research, development, feasibility studies, technology demonstrations, pilot-scale facilities and commercial installations that represent the first application of innovative technologies within the jurisdiction. Direct funding support is typically not available for commercial activities that utilize proven technologies (e.g. conventional pellet production), but projects that create marketable GHG reduction credits can use these as a supplementary source of financing. Additional subsidies to encourage the utilization of “waste” forest biomass are being discussed by government and industry stakeholders.

Natural Resources Canada - Industrial Research Assistance Program (NRC-IRAP) NRC-IRAP provides non-repayable contributions to Canadian SMEs interested in growing by using technology to commercialize services, products and processes in Canadian and international markets. NRC-IRAP also provides mentoring support and invests on a cost-shared basis for research and pre- competitive development technical projects. http://www.nrc-cnrc.gc.ca/eng/services/irap/financial-assistance.html

Natural Resources Canada -Internship Program with Innovative Small and Medium-sized Enterprises NRC-IRAP program provides financial assistance to innovative small and medium-sized enterprises in Canada to hire post-secondary science, engineering, technology, business and liberal arts graduates. http://www.nrc-cnrc.gc.ca/eng/services/irap/financial-assistance.html

Innovative Clean Energy Fund (ICE Fund)

The B.C. ICE Fund provides funding to cover a range of technologies, including: ocean tidal and wave, solar, geothermal, wind, biomass, wastewater, energy conservation and management and variable street lighting technology. Due to provincial budget considerations the ICE Fund is not accepting applications at this time. http://www.tted.gov.bc.ca/ICEFund/Pages/default.aspx

British Columbia Bio-Energy Network Provides funding to assist with the deployment of near term bio-energy technologies for BC. http://www.bcbioenergy.com/about/overview/

Scientific Research and Experimental Development - Tax Incentive Program

The federal Scientific Research and Experimental Development SR&ED Program provides tax incentives to Canadian businesses that conduct SR&ED in Canada. This program is intended to encourage businesses -- particularly small and start-up firms -- to conduct SR&ED that will lead to new, improved, or technologically advanced products or processes. http://www.cra-arc.gc.ca/sred/

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Scientific Research and Experimental Development Tax Credit Program Provides a 10 percent tax credit to qualifying corporations that carry on scientific research and experimental development (SR&ED) in British Columbia after August 31, 1999 and before September 1, 2014. http://www.rev.gov.bc.ca/business/Income_Taxes/Corporation_Income_Tax/tax_credits/scientific_resear ch.htm

Sustainable Development Technology Fund Aimed at supporting the late-stage development and pre-commercial demonstration of clean technology solutions: products and processes that contribute to clean air, clean water and clean land, which address climate change and improve the productivity and the global competitiveness of the Canadian industry. http://www.sdtc.ca/index.php?page=home&hl=en_CA

Northern Development Trust- Capital Investment and Training Rebate This program provides eligible businesses in wealth creating, export-driven sectors of the economy with up to $10,000 per new job based on direct capital investment and training expenditures related to the expansion or establishment of a business where two or more new jobs are created. http://northerndevelopment.bc.ca/about

Export Development Canada Export Development Canada provides support for the export activities of Canadian knowledge-based businesses. http://www.edc.ca/EN/Our-Solutions/Financing/Pages/default.aspx

ESS/NSERC Research - Strategic Projects Strategic Projects do not require any cash from the industrial partner – this program is for earlier stage research falling into one of the seven strategic areas that NSERC has identified as being of particular importance to Canada over the next decade or so. Sustainable energy systems, and specifically biomass conversion, are areas targeted by NSERC as being of particular importance. http://www.nserc-crsng.gc.ca/Professors-Professeurs/RPP-PP/SPG-SPS_eng.asp

ESS/NSERC Research - Collaborative Research and Development Collaborative Research and Development grants require 50:50 sharing between the company and NSERC, although the company’s 50% can be half cash and half in-kind. This program receives applications throughout the year and, provided all criteria are met, has a high success rate. http://www.nserc-crsng.gc.ca/Professors-Professeurs/RPP-PP/CRD-RDC_eng.asp

ESS/NSERC Research –Innovation Grant

The Idea to Innovation grants require some cost sharing with cash but the amount is somewhat more flexible. The program is intended to provide funding for the development of a technology that has very clear commercial potential and that needs to be transferred out of the university to a company. http://www.nserc-crsng.gc.ca/Professors-Professeurs/RPP-PP/I2I-INNOV_eng.asp

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EnCana Environmental Innovation Fund

Environmental Innovation Fund (EIF) finances projects that support the development, demonstration and, ultimately, the commercialization of innovative, clean energy technologies that relate to the energy sector. http://www.encana.com/environment/innovation-fund/

Program of Energy Research and Development

Funds research and development designed to ensure a sustainable energy future for Canada in the best interests of both our economy and our environment. It directly supports energy R&D conducted in Canada by the federal and provincial governments, and is concerned with all aspects of energy supply and use. http://www.nrcan-rncan.gc.ca/eneene/science/perdprde-eng.php

Precarn — Regional and Domain-based Alliance Programs Precarn provides programs which fund research and assist in the development of entrepreneurial people and commercialization of innovative technology which has commercial viability. http://www.precarn.ca/about/AboutPrecarnIncorporated/index.html

Science and Technology Internship Program

Provides an opportunity to recent graduates in science or engineering to gain relevant and meaningful work experience. Potential interns are invited to work on natural resource sciences projects of commercial potential, in cooperation with Natural Resources Canada. http://www.nrcan.gc.ca/careers/45

Global Environment Fund

The Fund invests in businesses around the world that provide cost-effective solutions to environmental and energy challenges. http://www.globalenvironmentfund.com/

Nano and Clean Technologies Program

The NRC’s Nano and Clean Technologies program activities focus on energy generation from renewable and non-renewable energy sources, as well as complementary energy conversion and storage technologies. http://www.nrc-cnrc.gc.ca/eng/techconnect/index.html

Eligible Business Corporation - 30% Provincial (BC) tax credit

Allows a small business to accept equity capital directly from investors without having to set up a Venture Capital Corporation . This investment structure is ideal for an investor that is planning to be actively involved in the growth of a small eligible business and gives a 30% BC tax credit. http://www.tted.gov.bc.ca/tri/ICP/VCP/EligibleBusinessCorporation/Pages/default.aspx

108 Options for Value-Added Processing of Coastal Forest Debris ecoENERGY Technology Initiative

The Initiative funds research, development and demonstration (RD&D) to support the development of next-generation energy technologies needed to break through to emissions-free fossil fuel production, as well as for producing energy from other clean sources, such as renewables and bio-energy. This fund has now been fully allocated. http://www.nrcan-rncan.gc.ca/eneene/science/etiiet-eng.php ecoENERGY for Biofuels

This fund supports the production of renewable alternatives to gasoline and diesel and encourages the development of a competitive domestic industry for renewable fuels. http://oee.nrcan.gc.ca/transportation/alternative-fuels/programs/10163

National Renewable Diesel Demonstration Initiative (NRDDI)

This initiative is to address industry and end-user questions about renewable diesel use by demonstrating how it will perform under Canadian conditions. http://oee.nrcan.gc.ca/transportation/alternative-fuels/programs/3330

Accelerated Capital Cost Allowance

Provides an accelerated rate of write-off for certain capital expenditures on equipment that is designed to produce energy in a more efficient way or to produce energy from alternative renewable sources. http://oee.nrcan.gc.ca/industrial/financial-assistance/1965

7.1 Innovative Funding Programs

Pulp and Paper Green Transformation Fund

In the U.S. Kraft pulp and paper mills that produce black liquor recently began taking advantage of a federal green energy subsidy by adding a small percentage of diesel fuel to their black liquor. That allowed them to claim it as a blended “alternative” fuel and thereby qualify for a tax subsidy on the black liquor which would have been burnt as a fuel in their power recovery boilers even without the subsidy. In total, the subsidy has been estimated to be worth up to ~$6 billion to American Kraft pulp producers.

Since this subsidy would have distorted the economics of the pulp sector substantially, the Canadian Government announced in early 2009 that it would reciprocate with a $1 billion subsidy it subsequently called the Pulp and Paper Green Transformation Fund. Eligible firms qualified on the basis of black liquor production in 2009 through to October. Those firms which applied to the fund and met eligibility requirements will receive funding over the next two years via Natural Resources Canada and can invest them in any of their pulp and paper facilities in Canada. As of late October 2009, the 24 announced recipients are shown in Table 7.1.

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Table 7.1

Pulp & Paper Green Transformation Program Recipients

Company Mill Name Locations Credits %

AbitibiBowater $33,213,351 3.49% Fort Francis Fort Francis, ON Thunder Bay Thunder Bay, ON

AlPac Forest Products Alberta Pacific Forestries Boyle, AB $62,869,884 6.62%

AV Group $36,379,474 3.83% AV Cell Atholville, NB AV Nackawic Nackawic, NB

Canfor Pulp Limited Partnership $122,243,936 12.86% Intercontinental Pulp Prince George, BC Prince George Pulp & Paper Prince George, BC Northwood Pulp Prince George, BC

Cascades East Angus $6,130,127 0.65% Norampac Trenton Trenton, ON Norampac Cabano Cabano, QC Cascades East Angus East Angus, QC

Catalyst Paper Crofton Division Crofton, BC $18,049,466 1.90%

DaishowMarubeni $59,100,267 6.22% Peace River Pulp Division Peace River, BC Cariboo Pulp & Paper* Quesnel, BC

Domtar $143,488,505 15.10% Domtar Kamloops Kamloops, BC Dryden Pup Operations Dryden, ON Domtar Espanola Espanola, ON Domtar Windsor Windsor, ON

Fraser papers $33,094,432 3.48% Fraser Papers Edmundston Edmundston, NB Fraser papers Thurso Thurso, QC

Howe Sound Pulp & Paper Howe Sound Pulp & Paper Port Mellon, BC $45,493,164 4.79%

Irving Pulp & Paper Irving Pulp & Paper Saint John, NB $33,401,247 3.51%

Kruger Kruger Wayagamack TroisRivieres, QC $6,905,533 0.73%

Meadow Lake Meadow Lake Meadow Lake, SK $2,610,046 0.27%

Mercer Celgar Zellstoff Celgar Castlegar, BC $57,769,363 6.08%

Nanaimo Forest Products Harmac Pacific Pulp Operations Nanaimo, BC $26,892,617 2.83%

Neucel Specialty Cellulose Neucel Specialty Cellulose Port Alice, BC $6,457,455 0.68%

Northern Pulp Nova Scotia Northern Pulp Nova Scotia Pictou, NS $28,138,334 2.96%

SFK Pulp SFK Usine de SaintFelicien SaintFelicien, QC $20,940,707 2.20%

SmurfitStone Container Smurfit Stone La Toque, QC $29,630,672 3.12%

Tembec $24,235,166 2.55% Tembec Chetwynd Pulp Division Chetwynd, BC Skookumchuck Pulp Division Cranbrook, BC Tembec Specialty Cellulose Division Temiscaming, QC

Terrace Bay Pulp Terrace Bay Pulp Terrace Bay, ON $19,183,535 2.02%

Tolko Industries Tolko Manitoba Kraft Papers The Pas, MB $13,357,389 1.41%

West Fraser Mills $88,423,335 9.30% Hinton Pulp Hinton, AB Eurocan Pulp & Paper Kitimat, BC Cariboo Pulp & Paper* Quesnel, BC

Weyerhaeuser Canada Weyerhaeuser Grande Prairie Operations Grande Prairie, AB $32,375,594 3.41%

Total $950,383,599 100.00%

* Joint venture between West Fraser Mills and DaishowaMarubeni

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US Biomass Crop Assistance Program The Biomass Crop Assistance Program (BCAP) provides financial assistance to owners and operators of agricultural and non-industrial private forest land who wish to establish, produce, and deliver biomass feedstocks. BCAP provides two categories of assistance:
Matching payments may be available for the delivery of eligible material to qualified biomass conversion facilities by eligible material owners. Qualified biomass conversion facilities produce heat, power, biobased products, or advanced biofuels from biomass feedstocks.
Establishment and annual payments may be available to certain producers who enter into contracts with the Commodity Credit Corporation (CCC) to produce eligible biomass crops on contract acres within BCAP project areas. http://www.fsa.usda.gov/FSA/webapp?area=home&subject=ener&topic=bcap

US Cellulosic Fuel Tax Credit Program (CFTC)

A cellulosic biofuel producer that is registered with the Internal Revenue Service (IRS) may be eligible for a tax incentive in the amount of up to $1.01 per gallon of cellulosic biofuel that is: sold and used by the purchaser in the purchaser's trade or business to produce a cellulosic biofuel mixture; sold and used by the purchaser as a fuel in a trade or business; sold at retail for use as a motor vehicle fuel; used by the producer in a trade or business to produce a cellulosic biofuel mixture; or used by the producer as a fuel in a trade or business. http://www.afdc.energy.gov/afdc/laws/law/US/413

Implications for Woody Biomass Feedstock

Beyond the announced distribution of funds from the Pulp and Paper Green Transformation Fund, additional potential funding to Canadian-based producers in the forest sector is highly speculative, although possible. To the extent that the BCAP and CFTC programs provide subsidies to the US-based producers, additional distortions will be introduced. Since pulp, paper and lumber are international commodities that are widely traded, such subsidies in the US will inevitably have negative economic implications for Canadian producers.

All of the programs described above have been announced publicly and it can be reasonably assumed that most companies in the forest products sector are aware of them. While the programs described above apply primarily to the pulp and paper manufacturers, through them the programs will have an indirect impact on the supply and price of wood fibre. They may ultimately have a trickle-down effect on the market prices for products such as pellets/briquettes and bio-oil. On the one hand owners of the fibre will be able to demand more money since they will know that their customer is receiving a subsidy. On the other end of the scale, an industrial consumer of densified materials such as pellets or bio-oil will likely try to reduce their purchase price if the producer is known to have received a subsidy. If so, producer economics may get squeezed from both ends.

Another possible impact from these types of subsidies will occur with respect to fibre supply. To the extent that ethanol or biodiesel becomes more economic to produce from cellulosic sources, there will be an increased demand for woody feedstock. In turn this will have the long term effect of reducing supply and increasing the price.

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Implications for Pellets/Bio-oil

The recent economic recession, reduced demand for softwood lumber and the closure of numerous saw mills and one pulp mill in BC has significantly shifted the availability of saw dust, planer shavings and other clean wood waste to pellet producers. Additional pressure on the supply of such fibre arising from subsidies to the pulp and paper producers and the availability of beetle-killed pine from the Interior will likely cause the supply to shift further.

In the short term absence of large-scale saw mill re-starts, the pressures on clean fibre supply and price will inevitably transfer to other sources of wood fibre such as debris. In that case the owners of debris will stand to benefit. In particular, companies such as WFP with existing harvesting licenses and rights to debris are strategically well positioned.

To the extent that the BC Government wants to stimulate the industry and help meet climate change commitments, it is clear that it may need to provide incentive to increase the utilization of logging debris.

In parallel with the above, there are increasing pressures on politicians, particularly in North America, to respond to the clearly evident climate change issues with decisive action that will match what has been happening in Europe for many years. The ongoing international negotiations for a successor treaty to the Kyoto Accord will provide a highly visible forum for these pressures.

Taken together, these forces seem poised to decrease the supply and increase the price of clean wood fibre, increase the value of wood waste, and increase the market value of GHG credits earned by displacing fossil fuels.

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8. Summary, Conclusions & Recommendations

8.1 Summary

8.1.1 WFP Biomass Resources

Scale & Distribution of Biomass Resources

As outlined in Section 1, WFP biomass resources under current license holdings are very substantial and are broadly dispersed on Vancouver Island. For the eight business units considered for this study, logging debris available from harvesting activities is estimated at over 800,000 Green tonnes/year (Gt/y). At the present time it is WFP practice that all of the available logging debris is raked into piles and burnt.

Cost of Biomass Resources

As defined in section 2, this study has assumed that roadside logging debris will be ground on site to a <6” product using mobile horizontal grinders. The ground biomass will then be transported to existing Dry Land Sorts where it will be screened, dried and processed either by torrefaction into a solid fuel or by pyrolysis into a liquid fuel. Using a methodology developed by FPInnovations, modified by inputs from WFP and Greenleaf sources, the cost of bush grinding the logging debris is estimated to be $16.98/Gt or $28.30/ODt, including allowance for administration, road access and royalty costs. These costs are assumed to be the same for each business unit. Using distances and haul speed factors provided by WFP, supplemented by inputs from Greenleaf sources, the cost of trucking the ground debris to the DLS sites ranges from a low of $14.43/Gt ($24.05/ODt) to a high of $31.28/Gt ($52.13/ODt). Combining these results, the total cost of ground biomass delivered to the DLS sites ranges from a low of $31.41/Gt ($52.35/ODt) to a high of $48.26/Gt ($80.43/ODt). The weighted average for this combined estimate is $34.90/Gt ($58.16/ODt) Due to uncertainties inherent in the cost estimation approach, a series of sensitivities were calculated, encompassing variations in: grinder utilization; grinder fuel use; trucking costs; trucking speeds; truck size; and one way haul distance.

8.1.2 Sector Profiles – Torrefaction, Densification and Pyrolysis

As described in section 3, torrefaction and pyrolysis technologies are under active and rapid development but at this time both are relatively immature. Conversely, densification technologies have been in commercial use for quite some time and their operating and cost characteristics are relatively well known. Experts at UBC provided a thorough and detailed overview of the generic status of these three technologies for this report.

With respect to torrefaction technologies, following a general review of the advantages and disadvantages of a torrefied product compared to other solid fuels such as standard wood pellets and coal, a total of 16 specific technologies were reviewed and compared to the extent that information was publically available. At this time it is not possible to determine a clear technology leader as applied to Coastal BC logging debris since insufficient performance data is available. Since all torrefaction technologies produce a loose, low density, carbonaceous product, in order to provide cost-efficient delivery to markets it is necessary to bind and compress the material into pellet or briquette form. Accordingly, a total of 7 pelleting, 2 briquetting and 1 cubing technologies were reviewed for this report. Most are well known and commercial scale cost data is available in generalized form.

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With respect to pyrolysis technologies, a total of 6 different types available from 14 developers were reviewed and compared to the extent that information was publically available. Raw pyrolysis oils are corrosive, contain oxygen and water, and are unstable, thereby requiring hydrocarbon refining processes for upgrading into fuels that are compatible with the existing fuel infrastructure and most engines. Several technology developers are working on catalytic upgrading techniques and one is progressing with a solvent extraction approach. Two developers (Tolero and Dynamotive) are seeking to integrate a refining process on site, rather than shipping the raw oil to a centralized refinery. As is the case for torrefaction, at this time it is not possible to determine a clear pyrolysis technology leader as applied to Coastal BC logging debris since insufficient performance data is available

8.1.3 Market Analysis

As detailed in section 4, with one exception markets for fuels made by torrefaction, densification and pyrolysis are not well developed at this time. The exception is standard wood pellets for which large volume markets have existed for several years, principally in Europe. In North America although there are a large number of standard wood pellet plants, most are focused on exporting the product to Europe. Although a number of jurisdictions in North America have promoted the use of sustainable fuels, consumers have been slow to switch from conventional hydrocarbon fuels due to low price, convenience and availability factors. In comparison, Europe has enacted tougher environmental legislation with more aggressive biomass targets. Although somewhat lagging Europe, fuel markets in Asia are moving rapidly toward consuming increasingly large amounts of biomass. Producers in BC are well positioned to serve the Asian markets where they face less direct competition from U.S producers which are predominantly located in the S.E. and N.E. regions. In the regional markets closer to BC that are accessible, fuels made by torrefaction or pyrolysis must compete with existing fuels that are readily available at low cost. For solid fuels from torrefaction potential regional market prices were benchmarked against three conventional fuels: large volume commodity coal; large volume commodity natural gas; and small industrial scale natural gas in BC. Export prices were benchmarked against established pricing for standard wood pellets and energy-equivalent pricing for torrefied pellets in Europe. For liquid fuels from pyrolysis the market values were estimated from third party market survey data for conventional heating and transportation fuels made from crude oil.

8.1.4 Pathway Opportunities

As outlined in section 5, a custom model was developed in order to move from generic data to an economic analysis of torrefaction and densification as applied to Coastal BC logging debris. Profiles were developed for 4 potential technology pathways across 4 potential markets. Combining the estimated base case cost of delivered biomass developed in sections 1 and 2 with the capital and operating cost and market information developed in sections 3 and 4, detailed economic profiles were constructed with results expressed in terms of simple pre-tax payback, pre-tax Internal Rate of Return (IRR), and pre-tax Net Present Value (NPV).

With respect to the projected economics of pyrolysis, two categories of technologies were evaluated; one using a custom financial model of a Tolero solvent condensation and extraction variant process at 300 tpd, and the other using models of conventional pyrolysis technologies at 50 tpd and 100 tpd. Of the two pyrolysis technologies evaluated in this report, the solvent extraction process has the potential to produce a diesel substitution fuel without accessing downstream refining facilities.

8.1.5 Environmental Impact

As defined in section 6, the existing practice of burning approximately 800,000 Gt/yr of logging debris is estimated to produce ~336,864 tonnes/year of GHG’s plus ~36,960 tonnes/year of CAC’s. According to accepted protocols developed by the Intergovernmental Panel on Climate Change (IPCC), the avoided

114 Options for Value-Added Processing of Coastal Forest Debris

GHG emissions from not burning slash piles are regarded as non-anthropogenic and therefore are not counted for the purpose of allocation to any fuel derived from logging debris. The avoided CAC emissions are not considered by the IPCC in such calculations.

Using emission factors from recognized third parties, the base case incremental emissions from grinding and trucking were estimated by business unit. Necessary preprocessing activities such as screening, drying, etc. are estimated to add ~5.25 kg CO 2e/Gt of biomass processed. Since all of the torrefaction and pyrolysis process developers claim near autothermal processes, their incremental GHG emissions are only in the range of 0.018 kg/Gt for torrefaction to 0.035 kg/Gt for pyrolysis. The resulting combined emission profile for torrefaction by business unit is ~27 – 33 g CO 2e/kg product, a ~98% reduction from the equivalent 1,770 -2,430 g/kg for coal. Similarly, the combined emission profile for pyrolysis by business unit is ~294 – 360 g CO 2e/litre of fuel, a ~89% reduction from the equivalent 3,007 g CO 2e/litre for off- road diesel.

8.1.6 Government Funding and Incentive Programs

As outlined in Section 7, a broad range of federal, provincial and regional funding and incentive programs has been enacted to encourage the adoption of sustainable clean energy technologies. Current economic conditions may cause some delay in the implementation of selected provincial policies and targets. It is expected that the recently released federal budget will have a more dramatic impact upon existing federal government programs. Given the timing of the budget, an assessment of potential changes was not possible within the timeframe allotted for this study.

8.2 Conclusions

This report has presented information and analysis around six technology options for the potential conversion of logging debris into useful energy products: • two densification paths that would produce either standard pellets or briquetted wood • two torrefied paths that would be coupled with densification techniques to produce either pelleted or briquetted torrefied material • two pyrolysis paths that would produce either raw bio-oil or a combination of diesel-quality fuel and an aqueous phase containing extracted chemicals

As described in detail in this report each of these technology pathways is significantly different from the others. Comparison of the risks associated with such diverse technologies is essentially a subjective process. In order to compare them as objectively and fairly as possible a matrix was developed in which each technology was evaluated according to five risk categories: • Technical, • Logistic, • Markets & Policy Drivers, • Environmental, and • Strategic For each category a weighting factor was assigned, such that the sum of all five weighting factors added to 100. The authors then applied their best judgment and assigned each technology a score ranging from 0 – 100 for each category. The analysis was completed for each technology by summing the weighting factors multiplied by the scores. The results are shown in Table 8.1.

115 Options for Value-Added Processing of Coastal Forest Debris

The risk weighted analysis of the six technology paths was then plotted against the economic results reported in section 5. The results are shown in Figure 8.1. Although the outcome of this process is subjective, the relative ranking of the processes conforms to general expectations in that: • standard wood pellets and briquettes are relatively low risk but have low or negative returns; the risk-return difference between pelleting and briquetting is relatively small but significant given the relative lack of market penetration by briquettes at commercial scale • torrefied pellets and briquettes both have somewhat higher risks and substantially higher economic returns as compared to either standard wood pellets or briquettes; the risk-return difference between the two torrefaction paths is small • pyrolysis processes, whether producing raw bio-oil or a diesel substitute, have both higher risk and slightly higher reward as compared to torrefaction processes; the risk-return difference between the two pyrolysis paths is also relatively small .

Direct operating experience with demonstration and/or commercial scale plants for both the torrefaction and pyrolysis processes will be required to quantify and reduce the major risk elements, and to verify the estimated economics.

116 Options for Value-Added Processing of Coastal Forest Debris

Table 8.1 Risk Weighted Analysis of Torrefaction, Densification and Pyrolysis Options

Technical Logistic Markets & Policy Drivers Environmental Strategic Weighted Case Weighting Factor Score Weighting Factor Score Weighting Factor Score Weighting Factor Score Weighting Factor Score Score 30 10 25 15 20

Not proven with west Full Life Cycle marginal Pellet Standard 25 Short shelf life 30 Europe well established.but 30 20 Lower technical risk 30 2700 coast debris feedstock benefit for Europe Large volumes required Competition from Eastern US No competitive advantages for Panamax & Interior Distribution required for Potential competitive Competitors larger scale Regional markets disadvantages Problems with offgassing Interior lower feedstock costs? & fire Regional markets require customers to invest in infrastructure

Not proven with west Less established market in Full Life Cycle marginal Nonconventional Standard 20 Short shelf life 40 40 20 Lower technical risk 40 3100 coast debris feedstock Europe benefit for Europe No shipping/handling Competition from Eastern US No competitive advantages systems for Europe & Interior Large volumes required Potential competitive Competitors larger scale for Panamax disadvantages Distribution required for Interior lower feedstock costs? regional markets Regional markets require Problems with offgassing customers to invest in & fire infrastructure

Technology at early Large volumes required Full Life Cycle marginal Pellet Torrefied 45 20 No established market prices 30 25 Higher technical risk 50 3675 stages of rollout for Panamax benefit for Europe Not tested with west Distribution required for Competition from Eastern US Theoretical competitive Excellent profile vs. coal coast debris feedstock Regional markets & Interior advantages Potential problems with Potential competitive System technology risk Competitors larger scale explosive dust disadvantages Developer technology Interior lower feedstock costs? risk Regional markets require Possible requirement for customers to invest in binder infrastructure Technology at early Large volumes required Full Life Cycle marginal Nonconventional Torrefied 40 30 No established market prices 40 25 Higher technical risk 60 4075 stages of rollout for Panamax benefit for Europe Not tested with west No shipping/handling Competition from Eastern US Theoretical competitive Excellent profile vs. coal coast debris feedstock systems for Europe & Interior advantages Distribution required for Potential competitive System technology risk Competitors larger scale Regional markets disadvantages Developer technology Potential problems with Interior lower feedstock costs? risk explosive dust Possible requirement for Regional markets require binder customers to invest in Technology at early Requires fuel distribution No established markets for Excellent profile vs fuel Pyrolysis Bio Oil 50 60 65 20 High technical risk 70 5425 stages of rollout infrastructure unrefined fuel oils Not tested with west Corrosive short shelf Customers must invest in Strategic alliances required (ABRI, Ensyn, Dynamotive) coast debris feedstock life infrastructure for: System technology risk Disposition of char Significant barriers to entry Refining Developer technology Few competitors Distributiion risk WFP potential displacement of kiln fuel Technology at early Requires fuel distribution Excellent profile vs Pyrolysis Fuel 60 55 No established market prices 50 40 High technical risk 75 5700 stages of rollout infrastructure diesel Not tested with west Disposition of aqueous No established markets for Problem components in Strategic alliance req'd for (Tolero) coast debris feedstock component? Aqueous Phase aqueous phase? Aqueous Phase WFP potential System technology risk Disposition of char Few known competitors displacement of diesel fuel Developer technology Chemicals Potential? risk Separation & purification of Aqueous Phase Confidential 117 Options for Value-Added Processing of Coastal Fores t Debris

Figure 8.1 Risk/Return Profiles

Higher Return

Pyrolysis Torrefied Fuel Pellet Pyrolysis

Torrefied Bio Oil Briquette

Moderate Higher Risk Risk

Standard Pellet

Standard Briquette

Negative Return 118 Options for Value-Added Processing of Coastal Forest Debris

8.2.1 Strategic Conclusions

Recent advances in biomass processing technologies are creating significant opportunities for forest sector stakeholders in BC, particularly for those with access to substantial volumes of wood fibre. Torrefaction technologies can be used to generate a sustainable solid fuel product with production costs that are not tied to global commodity prices, creating opportunities to displace conventional fuels and to open export opportunities. Pyrolysis bio-oil technologies can provide high-value sustainable liquid fuel products with production costs that are also not tied to global commodity prices, creating opportunities to displace conventional fuels in forest sector operations and to open new market/revenue generating potential.

To maximize the economic potential of biomass resources, it is vital that forest sector producers integrate biomass processing strategies into their overall business development planning. The biomass feedstocks targeted within this study are primarily byproducts generated through ongoing harvesting activities. For this reason, optimal strategies for biomass utilization must be tied to future plans for harvesting. If, for example, the focus of future plans is to expand into additional centralized manufacturing facilities, a model similar to that being implemented by Tolko/Ensyn might provide the best risk/return option. Alternatively, if the producer is planning to focus on harvesting activities, the more decentralized, modular processing technology options may work best.

The two technology pathways analyzed in this study present very different alternatives to continuing with open burning of slash piles. In either case there are large associated incremental costs and risks involved if direct investment is undertaken. If the owner of the logging debris does not have surplus cash available for investment, or is not comfortable with taking on the risks of dealing with new technologies and new markets directly, then the development of strategic alliances, joint ventures and partnerships will be critical. Technology developers are often small and undercapitalized. Joint venture structures involving the biomass resource owner, the technology developer, and venture capital participants may provide a template to move forward into value-added processing. The use of contractors for debris collection, grinding and trucking will reduce cashflow requirements and risk exposure at the front end.

If the production of a solid fuel using a fairly straight-forward approach is a priority, then one of several torrefaction processes may be a good strategic fit, provided that the technical claims and preliminary economics are verified. The currently limited domestic market for such fuels suggests the need for an aggressive regional distribution/marketing partner to achieve successful market penetration. Navigating international markets in Asia and Europe will require the services of an experienced international marketing agent and/or a strategic alliance with an experienced pellet exporter.

If the production of a liquid bio-oil appears to be more attractive, then one of several pyrolysis processes may be a good strategic fit, provided that the technical claims and preliminary economics are verified. The currently limited domestic and international markets for such fuels will dictate that a business relationship with an experienced domestic refining/blending and marketing partner is required.

For conventional pyrolysis technology developers the markets for raw bio-oil are not yet established. The conventional pyrolysis processes are becoming well understood and at least one has been demonstrated at commercial scale. The Ensyn process seems poised to succeed commercially but the developer is focused upon larger plant sizes in the range of 400 tpd to achieve economies of scale. While other developers are focused on smaller, more mobile facilities, the time, cost and risks for mobilization and demobilization are not yet known.

Confidential 119 Options for Value-Added Processing of Coastal Forest Debris

If the production of a diesel fuel substitute for internal use in conventional engines is a high priority, the Tolero solvent extraction pyrolysis process may be a good strategic fit provided that its technical claims and preliminary economics are verified. Although the fuel is claimed to be blendable with regular diesel to meet similar specifications, the logistical requirement for an intermediary blender combined with the need for aqueous phase off take, makes the path between biomass and upgraded fuel more complicated.

The Tolero solvent extraction process offers significant upside opportunity to participate in the chemicals market if the extraction and purification steps can be added at reasonable cost. Some individual chemicals present in the Aqueous Phase appear to have high market value. However, not all companies considering pyrolysis will be able or want to participate simultaneously in the fuels, chemicals and char markets, the last two of which do not yet have established markets.

Finally, while the impact of carbon taxes was considered in some of the economic analyses undertaken for torrefied/densified products, the value of potential carbon credits was not integrated into any of the financial profiles developed. The market for carbon credits remains thin and somewhat speculative in nature.

120 Options for Value-Added Processing of Coastal Forest Debris

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