Biomass to energy

Developing sustainable carbon circularity Looking at advanced applications and business models

November 2020 Compiled by the Kearney Energy Transition Institute

Biomass to energy - Developing sustainable carbon circularity

Acknowledgements The Kearney Energy Transition Institute wishes to acknowledge the following people for their review of this FactBook: Dr. Jean-Michel Commandré, program director at CIRAD, Head of Research Unit Biomass, Wood, Energy, Bioproducts; as well as Richard Forrest, Claude Mandil, Antoine Rostand and Dr. Adnan Shihab-Eldin, members of the board for the Kearney Energy Transition Institute. Their review does not imply that they endorse this FactBook or agree with any specific statements herein. About the FactBook: Biomass to energy - Developing sustainable carbon circularity This FactBook seeks to provide an overview of biomass related technologies, emerging applications, and new business models, covering the entire value chain and analyzing the environmental benefits and economics of this space along with key insights. About the Kearney Energy Transition Institute The Kearney Energy Transition Institute is a nonprofit organization that provides leading insights on global trends in energy transition, technologies, and strategic implications for private-sector businesses and public-sector institutions. The Institute is dedicated to combining objective technological insights with economical perspectives to define the consequences and opportunities for decision-makers in a rapidly changing energy landscape. The independence of the Institute fosters unbiased primary insights and the ability to co-create new ideas with interested sponsors and relevant stakeholders. Authors Thomas Vaillant, Romain Debarre, Prashant Gahlot, Céleste Grillet, Jean-Karim Intisar, Christian Tapolcai and Jo Webster

2

Kearney XX/ID Bioenergy, or Biomass has played a predominant role in the energy mix and provides multiple decarbonization solutions biomass-to-energy, Biomass refers to any organic matter, from vegetal or animal origin (including waste), which can be used to remains the main produce energy. It is the first and largest renewable energy source used by mankind (about 68% of global contributor to the renewable energy demand in 2017). Biomass (for example, wood) has been used for heating and cooking for centuries. It corresponds to renewable energy “traditional” bioenergy, where the biomass is directly combusted, generally for heating or cooking mix (1/2) purposes. Biomass is also used to produce “advanced” bioenergy, where it is converted into bioproducts (for example, bioethanol, biogas) through modern conversion methods. In principle, use of bioenergy would be carbon neutral if there were no emissions from its industrial value chain. Bioenergy could theoretically decarbonize sectors representing about 50% of global GHG emissions. Biomass can be used directly in transports and buildings or used to generate heat and power. It can also be used in the industrial sector, either to cover its energy needs or as a feedstock in various industrial processes.

Advanced bioenergy solutions emerged in the ’90s and has been followed by the emergence of a different generation of biofuels relying on different feedstocks Bioenergy role in energy In the 90s, the so-called first generation of bioenergy emerged, using mostly food crops (for example, transition sugarcane) as a feedstock to process the molecular transformation into liquid and gaseous bioenergies at industrial scale. Although these first-gen bioenergy solutions benefited from carbon emissions reduction, (Introduction: pages 13–31) using the natural carbon cycle, these solutions suffer from the competition with the food value chain. A second then third generation of bioenergy emerged, using non-food-competing sources—such as wood and forestry residues, crops and agricultural residues, algae and human and animal waste—as feedstocks. This heterogeneity is also visible in the chemical composition of biomass. Indeed, biomass from vegetal origin is mainly composed from lignin and cellulose, whereas biomass from animal origin combines proteins, lipids, and carbohydrates.

Executive summary (1/8)

3 Source: Kearney Energy Transition Institute Kearney XX/ID Bioenergy, or Bioenergy development faces three main challenges: sustainability constraints, value chain complexity, and maturity of technologies biomass-to-energy, From a sustainability perspective, bioenergy production can be carbon neutral and even negative when remains the main combined with CCS. However, bioenergy use also comes with sustainability concerns, notably regarding contributor to the possible competition with food production, but also to potential land-use change or to high resource requirements for feedstock cultivation. Bioenergy solutions rely on complex value chains, characterized renewable energy by multiple feedstocks and energy transformation pathways with emerging technology applications. mix (2/2) Advanced bioenergy development decelerated in the late 2000s. But between 2018 and 2040, bioenergy contribution is expected to stay steady at about 10% of the world energy mix, with an average annual growth rate of +2.5% per year for advanced biomass demand (vs. 1% per year world energy demand). This latency actually hides an increase in the share of advanced bioenergy solutions (+500 Mtoe) vs. traditional use of biomass (-75 Mtoe), showing that the biomass-to-bioenergy value chain has an increasing role to play in energy transition. The sustainable fraction of the feedstocks could fuel up to 25% of the total energy demand by 2060. It represents enough energy to cover the needs of the transport sector. Identifying the optimal transformation pathways and competitive applications and markets are the first priorities of these technology solutions. Bioenergy role in energy transition This factbook aims to assess biomass-to-energy value chain attractiveness (vs. fossil and renewable (Introduction: pages 13–31) alternatives) and its ability to contribute to climate change mitigation.

Executive summary (1/8)

4 Source: Kearney Energy Transition Institute Kearney XX/ID The goal is to find Advanced bioenergy solutions rely on six main categories of feedstocks and complex value chains optimal pathways Six main feedstock types potentially provide carbon emissions reduction solutions not competing with the food value chain: animal waste, agricultural residues, forestry residues, municipal solid waste, from feedstock to algae, and energy crops. Their transformation into bioenergies generally occurs in three main steps: biofuels collection and conditioning, pretreatment, and conversion. Multiple options exist at each main step, making the bioenergy value chain an almost endless combination of processes and chemical transformation.

The biomass transformation process into bioenergy is composed of three main steps: conditioning, pretreatment, and conversion When processed, biomass is refined through one or more sub-steps: conditioning which aims to reduce feedstock size and moisture content and increase its energy density, pretreatment and conversion which convert the carbon stored in the organic matter into a refined biofuel. Depending on the feedstock qualities (for example, high content in starch or oil) and composition (C,H,O,N ratio) some processing methods can be preferred and the intermediate (for example, syngas, pyrolysis oil) or final product (for example, alcohol, liquid hydrocarbon) created will differ. Overall, most conversion processes are specific to a biofuel while most feedstocks can be used for a given conversion process. Optimizing the conversion Biomass to bioenergy conversion pathways pathway for a given biofuel is crucial to get the most of biomass supply. Decisions may include several criteria: cost, energy efficiency, maturity, scalability, GHG emissions, energy consumption, and (Section 1: pages 32–68) nature of the by-products. For instance, analyses show that hydrothermal liquefaction and hydrothermal upgrading is the optimal way toward liquid hydrocarbons (renewable diesel, biogasoline, bio jet fuel), carbohydrates or syngas fermentation is the best way to produce alcohols (ethanol, methanol, butanol), and anaerobic digestion is the preferred route toward biogas and biomethane.

Executive summary (2/8)

5 Source: Kearney Energy Transition Institute Kearney XX/ID In 2060, the overall Feedstock potential can be regrouped in three stock types: theoretical, technical, and sustainable sustainable This factbook scopes the following feedstocks: animal waste, agricultural residues, forestry residues, potential of municipal solid waste, algae, and energy crops. In total, one-third of the theoretical potential is sustainably exploitable in 2060. bioenergy could Municipal solid waste and animal waste are revalorized as biomass feedstock but they are available in cover 15% to 30% limited amount (each account for 5% of the global sustainable potential). For municipal solid waste, waste- of total energy to-energy pathways are attractive and policies are expected to make recycling more compelling in the long demand term. Animal waste scalability for bioenergy is limited because of pretreatment requirement, low collection rates, distributed supply, and popular alternative usage (for example, fertilizer). Agricultural residues, as by-products of food crops, are various and abundant (one-third of the global sustainable potential) with low sustainability risks (except for GHG emissions). Forestry residues supply is distributed and limited by collection issues and sustainable forest management requirements (for example, preserve local biodiversity). Only 15% of forestry theoretical potential is sustainable (highly dependent on local characteristics). Algae are promising (best energy content in MJ/kg) but their conversion process is still immature and strict Biomass feedstock potential regulations are required to ensure sustainability. (Section 1.1: pages 33–53) Energy crops are specifically grown for bioenergy uses from non-edible crops but can have a detrimental impact on food supply by changing land allocation (about 40% of the global sustainable potential). Agricultural residues and energy crops are expected to be the two major sources of sustainable biomass They also have the highest production-related GHG emissions (after algae, cultivation of which is still energy- and nutrients-intensive). A sustainable feedstock must not compete with other usage to avoid additional pressure/depletion of resources (especially for feedstock competing directly with food chain) and respect environmental constraints (soil quality for animal waste, biodiversity for forestry, air quality for Executive summary (3/8) MSW, water use for algae). Identifying the optimal pathways in biomass-to-bioenergy value chains and sectors where biofuels applications are competitive vs. sustainable alternatives becomes the first-order 6 priority to maximize bioenergy generated and optimize its usage.

Source: Kearney Energy Transition Institute Kearney XX/ID The feedstock and Modern biomass transformation processes were developed at the end on the 20th century transformation To be transformed, biomass is refined through one or more of these sub-steps: conditioning (aims to reduce feedstock size and increase its energy density) or pretreatment and conversion (to access and pathways need to convert the carbon stored in the organic matter into refined biofuel suitable for use). be optimized for During pretreatment and conversion biomass is decomposed into several building blocks using the targeted mechanical, thermal, chemical, or biological reactions. biofuel Processing technologies are various, from petroleum industry practices to natural processes A lot of processes for biomass come from the petroleum industry and are adapted to this “new” carbon source (for example, Fischer-Tropsch, hydrocracking). On the other hand, biological processes are also important and inspired from natural processes of this resource (anaerobic digestion, fermentation). Processing technologies can require energy input (gasification), produce energy (incineration), produce and consume energy (self sustained pyrolysis), or be autonomous (fermentation, anaerobic digestion). The output depends on both the feedstock composition and the transformation pathway Depending on the pretreatment technology used, the output can be an intermediate (in other words, input Biomass to bioenergy for conversion process, for example syngas, pyrolysis oil) or a final product (for example, biofuel) which transformation process can be further upgraded and refined in solid, liquid, or gaseous fuel later on. (Section 1.2: pages 54-68) Depending on the feedstock properties and composition (C,H,O,N ratio) the intermediate properties will vary (for example, high content of sugar/starch gives carbohydrates, high lipid fraction gives vegetable oil). Most conversion processes are specific to targeted biofuels while most feedstock can be used for any conversion process. Identifying the optimal feedstock and pathway for each biofuel is crucial for bioenergy penetration and relies on multiple criteria such as energy efficiency, GHG emission, energy consumption, nature of the by-products, cost, maturity, and scalability

Executive summary (4/8) Examples of optimal pathways—for renewable diesel: agricultural residues x hydrothermal liquefaction x hydrotreatment; for biomethane: animal waste or agricultural residues x anaerobic digestion 7 Source: Kearney Energy Transition Institute

Kearney XX/ID Biomass is Current advanced bioenergy demand is concentrated in the heat and power and industry sectors currently used in They each represent 34% of the advanced bioenergy demand, followed by the buildings sector with 18% and the transport sector with 14%. The economic diagnosis performed in this factbook revealed two types the heat and of market segments for advanced biofuels, each with specific dynamics. The first ones are “pivot power and markets” where advanced biofuels are already established and characterized by a high contribution to industry sectors, bioenergy growth in absolute value but a low annual growth rate. The second ones are “end-game but the most markets” where advanced biofuels should still be early stage by 2040 and characterized by a low contribution to bioenergy growth in absolute value but a high annual growth rate. Power and combined promising future heat and power sectors (50% contribution and 4%/yr growth) as well as fuel for trucks (14% contribution applications are with 6.5%/yr growth) appear to be “pivot markets,” whereas the aviation (6% contribution and 22%/yr for transport growth) and shipping sectors (2% contribution and 12%/yr growth) are “end-game markets.” Biomass-to-bioenergy value chain economic development relies on five interconnected drivers The five drivers are often defined at country or even local scale, for instance the feedstock supply determines the energetic potential of the bioenergy (volume effect), shapes the biomass-to-bioenergy value chain (mix effect), and is a key driver for biofuel quality/cost competitiveness (price effect). The Bioenergy market infrastructure maturity determines feasibility and risks associated with bioenergy projects, while opportunities regulation drives the biomass market supply and the bioenergy demand (volume and price effect), the process economics drive bioenergy cost competitiveness (price effect), and substitutability drives (Section 2: pages 69–115) market positioning for biofuels and depends on the penetration of alternative renewable energies (for example, trucks, aviation, and shipping are the sectors where the uptake of alternative renewable solutions is forecasted to be the most limited). The value chain assessment and determination of market opportunities led to the study of several business models in detail – Municipal solid waste x sorting x incineration x CHP in the UK

Executive summary (5/8) – Forestry residues x hydrothermal liquefaction x hydrotreatment x bio jet fuels for aviation in the US – Energy crops x anaerobic digestion x biomethane x power generation in China 8 – Agricultural residues x hydrothermal liquefaction x hydrotreatment x renewable diesel in the US Source: Kearney Energy Transition Institute Kearney XX/ID Advanced biofuel The combination of the biofuel produced and the market segment can also be optimized has competitive In order to do so, the technical characteristics of 12 of the most common biofuels (solid, liquid, and gaseous) were compared and their competitive advantages in each market segment where they are advantages in applicable were assessed. In total, biofuels have been assessed on nine criteria and three dimensions: hard-to- technical, economic, and sustainable, with equivalent weight in total ranking. decarbonize sectors such as Technical diagnosis shows that biomass for power (biomethane) and liquid hydrocarbons (for example, renewable diesel, gasoline, and jet fuel) are the most attractive aviation The latter are attractive because of their low substitutability and high potential in the transport sector. They could play a significant role in the energy transition; however, they are not sufficiently mature and need to be supported by regulations and policies to be able to compete economically with their fossil counterparts. Bio jet fuel is not competitive yet and lacks policy supports but looks to be a viable way to decarbonize aviation. Renewable diesel (chemically similar to diesel) and biogasoline (chemically similar to gasoline) have higher potential in road transport and shipping. Biomethane is a promising alternative to decarbonize heat and power supply potentially at a lower cost than natural gas. For other processed biofuels (liquid and gaseous), they are more mature but limited by blending requirements or Bioenergy market dynamic renewable alternative competition. (Section 2.1: pages 69–97)

Executive summary (6/8)

9 Source: Kearney Energy Transition Institute

Kearney XX/ID Local conditions Biomass-to-bioenergy value chain economic development relies on five interconnected drivers such as Five drivers are often defined at country or even local scale and can act as levers to activate in order to regulations and improve market environment. Feedstock supply determines the energetic potential of the bioenergy (volume effect); shapes the existing biomass-to-bioenergy value chain, in other words the pathway for processing biomass (mix effect); and is a infrastructures are key driver for biofuel quality/cost competitiveness (price effect). Bioenergy supply is genuinely linked to key to successful primary land demand since it relies on food and wood consumption patterns (biomass residues collected as by-product throughout food or wood supply-consumption chain). It is also linked with land utilization bioenergy (primary biomass is directly grown from farmland or forest). Besides, each feedstock has its own drivers, development linked to local and sustainable constraints that can affect price and volume of supply available and alternative uses of feedstocks act as competition for supply and will drive prices up. Infrastructure maturity determines feasibility and risks associated with bioenergy projects which affects the entire value chain (barrier to entry) as well as its rentability (price effects). Regulation drives the biomass market supply and the bioenergy demand (volume and price effect) through five dimensions that are unequally advanced between countries: waste management regulations, Bioenergy market decarbonization targets and blending mandates, land use and planning regulations, fiscal incentives and opportunities government subsidies, and other sustainability policies. (Section 2.2: pages 98–114) Process economics drive bioenergy cost competitiveness (price effect) with sustainable options (biomass-to-power is competitive with fossil fuels in some regions, but wind and solar prices are expected to reduce further and biomass-to-biofuel/gas is likely to remain more expensive than fossil fuels)— opportunity driven by country regulation. Substitutability drives market positioning for biofuels and depends on the penetration of alternative renewable energies. Biomass usage should focus on market segments without other sustainable alternatives and where storable energies are valued in order to get the most of its competitive advantage. As such, it should avoid substitution with competitive energies: renewable diesel in truck and shipping Executive summary (7/8) industries, bio jet fuel in aviation, biomethane in power generation.

10 Source: Kearney Energy Transition Institute

Kearney XX/ID Biomass to energy In the UK, waste to energy emerged as a waste management solution to replace landfill disposal has successful This solution, combined with recycling, is an efficient way to revalorize waste and minimize the environmental impact of its disposal. Its share of the waste market is increasing (by 3% between 2018 and applications in 2019) and large new projects are in development in the UK. Energy from waste consists of thermal buildings and treatments such as incineration or pyrolysis to reduce waste volume and produce sustainable energy from hard-to- the organic fraction of MSW. decarbonize Bio jet fuels, chemically like conventional jet fuels, are promising and developed in the US transport Bio jet fuels are heavy liquid hydrocarbons produced from biomass. They are advanced liquid biofuels industries which have not reached maturity yet and require technically challenging production processes. Thus they are mostly investigated in developed countries such as the US with the target of decarbonizing the aviation and shipping sector in a long-term perspective. Their production is mostly based on hydrotreatment of waste fats or vegetables or gasification and upgrading with a very wide range of possible feedstocks. Overall, these biomass applications are not cost-competitive yet and need policy support. In China, biomass is used to produce heat and power in rural areas to replace natural gas Biomethane production through biomass upgrading or biomass gasification is forecasted to play a rising Bioenergy successful role in the decarbonization of the power and transport sectors. This small-scale application with low business models investment cost is rapidly growing in developing countries or rural areas such as seen in China. The use of (Section 3: pages 115-133) biomethane significantly reduces the GHG emissions compared to fossil fuels and its development is facilitated by its compatibility with existing natural gas infrastructures. Renewable diesel is produced in the US to decarbonize the transport sector in the short term Renewable diesel is a liquid hydrocarbon chemically equivalent to its petroleum counterpart. It can be produced from biomass through oil upgrading (similar to petrochemistry processes) or gasification and upgrading. Its production is not competitive yet but has better penetration as a blend than bio jet fuels. Co-firing biomass in cement kilns to decarbonize cement industry Executive summary (8/8)

11 Source: Kearney Energy Transition Institute

Kearney XX/ID AGENDA Executive summary 3 Focus : Bio jet fuels 81 Introduction: Bioenergy role in energy transition 13 Focus : Biomethane 82 I. Biomass-to-energy value chain 32 Application sectors 84 Biofuels attractiveness assessment 86 1. Feedstock overview 33 Regulation and dependencies 87 Feedstock definition and classification 35 Sectorial growth 88 Focus : Animal waste 38 Focus : Energy 89 Focus : Agricultural residues 40 Focus : Transport 91 Focus : Forestry residues 42 Competitive advantage assessment—economic diagnosis 96 Focus : Municipal solid waste 44 Focus : Algae 46 2. Market drivers and corresponding enablers 98 Focus : Energy crops 48 Bioenergy demand per continent 101 Feedstock energy potential vs. demand 50 Main drivers 102 Feedstock supply 103 2. Processing technologies 54 Infrastructure maturity 106 Processing methods maturity 57 Regulation and acceptance 108 Processing pathways and intermediates 58 Technologies and economics 110 Intermediate products 61 Substitution 111 Conditioning technologies 63 Pretreatment technologies 65 Conclusion: Successful business models 115 Conversion technologies 66 Processing pathways ranking 68 Waste to energy UK 119 Bio jet fuels US 122 Biomethane China 125 II. Biofuels market opportunities and enablers 69 Biodiesel US 128 1. Attractiveness and maturity 70 Co-firing in cement industry 131 Biofuels maturity 73 Biofuels definition 74 Bibliography 134 Product assessment—technical diagnosis 77 Focus : Bio gasoline 79 Focus : Renewable diesel 80

12

Kearney XX/ID Introduction

Bioenergy role in energy transition

13

Kearney XX/ID There are two Traditional bioenergy Advanced bioenergy types of bioenergy: – Direct combustion of untransformed solid – Indirect combustion and conversion of traditional (direct biofuel (wood, charcoal, and animal waste) biomass energy to advanced fuels combustion) vs. – Mostly used in developing countries – Used in developing and industrialized advanced (indirect countries – Low efficiency combustion and – Sustainable source of electricity and heat conversion) – Heat production applications as well as liquid and gaseous fuel – Vital and affordable energy for cooking and space heating

Introduction – definition

14 Sources: Traditional Biomass Energy, Bonn 2004, IRENA; Kearney Energy Transition Institute

Kearney XX/ID So far, advanced Overview of the four “advanced bioenergy” generations bioenergy can be produced from 1st generation 2nd generation four different biomass Definition Definition – Bioenergy produced from edible – Bioenergy produced from non-edible generations, crops (for example, oil crops, sugar crops and waste to have a limited and starch crops) on arable land impact on food security characterized by Advantages Advantages different sources – Easy to harvest – No direct competition with food Drawbacks (except for land use) – Competition with food cultures Drawbacks – Poor yields – Possible adverse effects on local biodiversity – Limited resources – Land use change

This factbook focuses on generations 2 and 3 since generation 1 competes 3rd generation 4th generation directly with the food chain and generation 4 is too early Definition Definition stage. – Bioenergy produced from micro or – Bioenergy produced from genetically macro algae, which have high yields modified crops to maximize yield and limited land use impacts Advantages Advantages – High yields – No competition with food – Carbon neutral or negative (with – High yields CCS) Drawbacks Drawbacks Introduction – definition – Expensive/early stage resource – High engineering requirements and – Water intensive cost 15 Note: CCS is carbon capture and storage. Sources: Green Prophet (Picture), Exeter University (Picture), Biomass Magazine (Picture), Chain Reaction Research (Picture); Kearney Energy Transition Institute Kearney XX/ID In principle, use of Biomass-to-energy carbon cycle bioenergy would be carbon neutral Biofuel combustion Biomass absorbs CO2 if there were no releases CO2 into the from the atmosphere emission from non atmosphere through photosynthesis renewable sources Atmosphere in its industrial CO2 CO2 value chain

Consumption Biosphere Biofuel carbon cyclecarbonBiofuel B2E carbon cycle

Carbon neutrality of bioenergy uses the natural CO carbon cycle of biomass 2 Biofuel Biofuel production Biomass

CO2 emissions from cyclecarbonchain Value CO2 biofuel consumption

CO2 emissions from Refine Convert Pretreat Condition Transport Harvest CO2 biofuels value chain Biomass is transported, Biofuel is used for Introduction – biomass role in conditioned, and energy production (heat, carbon cycle processed to produce electricity, transport fuel) biofuel

16 Source: Kearney Energy Transition Institute

Kearney XX/ID Bioenergy is Global GHG emissions per sector and Biomass alternatives highly applicable; bioenergies applicability for corresponding 2010, GtCO2eq/year, without AFOLU2 sector theoretically it 16% could decarbonize – Jet fuels Rail – Biogasoline sectors Pipelines Shipping – Biodiesel representing Aviation – Bioethanol 21% Road about 50% of Commercial (Direct and indirect) – Heat and power from municipal global GHG solid waste 1 Residential emissions (Direct and indirect) – CHP from gasification 23% Landfill, waste incineration, and others Wastewater treatment Cement production – Heat and power from solid Chemicals biofuels Ferrous and non-ferrous metals – CHP from biogases Bioenergy is highly 40% Other industries applicable thanks to the Petroleum refining versatility of its products, Fuel production and transmission which range from liquid biofuels (storable, – Heat and power from biogases transportable) to pilotable – Energy from waste electricity Electricity and heat

Introduction – biomass Energy Industry Buildings Transport applicability per sector Applicability of biomass solutions Full Partial Very limited 1. 15% in Transport, 29% in Energy, 11% in Industry GHG emissions could be avoided by using biomass. 2. AFOLU is agriculture, forestry, and other land use. 17 Sources: IPCC (https://www.ipcc.ch/report/ar5/wg3/); Kearney Energy Transition Institute

Kearney XX/ID Bioenergy is Renewable energies primary demand historically the 2000–2017, Mtoe, world first contributor to Wind X% CAGR 2.9% the renewable mix; Solar 1,894 Geothermal 2.6% 1,789 5.1% however its share Hydro 4.0% 3.9% Advanced Biofuels 3.0% 4.5% is now decreasing 2.7% 4.3% Primary Solid Biofuels 1,577 1.9% 1.2% vs. wind and solar 3.9% 1.6% 18.5% energies 1,382 0.6% 18.8% 1,276 3.9% 0.5% 18.8% 27% 27% 20% 16% 4.1% 7.2% 18.3% 7.3% 17.6% 8% 20% 6.0% 24% 16% 3.2% 2.1% 0.5% 3% 4.5% 5.5%

2.5% 3% 2.5% 2.5%

11% 16% 7% 3% 60.7% 1% 1% 68.2% 1% 62.6% 1.5% 75.6% 73.5%

Biofuels seems to have Fastest growth for wind Fastest growth for solar reached maturity before (+27% per year) vs. +16% (+24% per year) vs. wind, solar, and per year for advanced advanced biofuel drop geothermal renewable biofuels down +7% energies

Introduction – biomass vs. 2000 2005 2010 2015 2017 other renewables demand

18 Sources: World Energy Outlook 2019 (IEA); Kearney Energy Transition Institute

Kearney XX/ID Advanced Advanced biofuels energy demand World, 2000–2017, Mtoe +5.4% bioenergy has 137 130 0% 0% 7% seen its growth 9% 13% slow down in the +13.7% 95 13% 0% 22% late 2000s 10% 20% 0% 0% 15% 0% 0% 7% 21% 17% 3% 24% -11% 23% 6% 44 5% 3% 1% 0% 9% 21% 26 35% 26% 41% 10% 10% 11% 0% 12% 7% 11% 9% 1% 35% 34% 27% 35% 3% 36% 26% 15% 19% 6% 3% 27% 32% 2000 2005 2010 2015 2017

Bio jet kerosene Renewable municipal waste Biogases X% CAGR Other liquid biofuels Biodiesel Bioethanol

Technical drivers Economic drivers Sociopolitical drivers

2000–2010 2000–2010 2000–2010 – First renewable technology to reach – Oil crisis leading high oil prices in 2008 – Interest rising for climate change and maturity and commercial-scale (peak price above $160/barrel) sustainable development leading to the deployment (sometimes even before – Renewable solutions not cost uptake of low-carbon technologies 2000) competitive – High adaptability to existing 2010–2020 infrastructure at low scale for biofuels 2010–2020 – Lagging policy framework in main (blending with gasoline or diesel) which – Increase in feedstock costs and slow biofuels markets facilitate early deployment overall decrease of bioenergy costs – Higher concerns about food (-14% between 2010 and 2019) competition and land use change 2010–2020 – Low prices for oil over the decade induced by biofuels – Uptake limited by blending limits and ($70/barrel on average) Introduction – advanced low uptake of “flex-fuel” vehicles – Sharp decrease in wind and solar bioenergy demand – Increase in feedstock harvesting prices to become cost competitive with requirements to stick to sustainability bioenergy (-78% for solar PV and -35% concerns for wind between 2010 and 2018) 19 Sources: Renewable Power Generation Costs 2018 (IRENA), IEA Renewables Information Database (2018); Kearney Energy Transition Institute

Kearney XX/ID Wind and solar Primary energy demand by fuel Macro trends energies are 2000–2040, Mtoe, world, stated policies scenario expected to grow In 2040, carbon neutral faster than 1.0% energies will represent advanced biomass 17,720 25% of world mix (vs. 20% 17,010 in 2017) by 2040 (+7% vs. 16,310 7% +2.6% 7% 2.0% 15,535 3% -0.5% Bioenergies’ share of +2,5%) 6% 3% 3% 6% 3% global demand will remain 4% 7% +1.8% 13,995 4% 3% 6% constant (~10% energy 5% 3% 5% 5% 4% 5% +7.4% 4% 5% mix): 3% 5% +1.2% 5% 2% – Advanced biomass share will almost double 24% 24% 25% +1.5% 10,025 23% (in other words, the same 4% 6% 22% 2% CAGR as all carbon 7% 1% neutral energies) Overall, world energy demand will increase by 21% – Traditional biomass ~1% per year till 2040 32% 31% 30% 29% 28% +0.4% share will decrease by only 1% relative to global 37% demand Other renewable energies’ 27% 25% 24% 22% 21% +0.0% weight in the global mix 23% will grow ~x4

2000 2017 2025 2030 2035 2040

Introduction – biomass in Advanced biofuels1 Hydro Nuclear Oil primary energy demand Primary solid biofuels2 Other renewables Gas Coal X% CAGR 2017–2040 1 Modern uses of biomass include advanced heat and power, biogas, biofuel 2 Traditional uses of biomass include “fuelwood, charcoal, and organic waste” used as the main cooking fuel for 2.3 billion people 20 Sources: IEA WEO 2019 – Stated Policies Scenario; Kearney Energy Transition Institute

Kearney XX/ID This factbook Bioenergy demand forecast—stated policies scenario focuses on 2018–2040, Mtoe, world advanced +1.3% bioenergy, the main growth driver 74 1,800 of bioenergy 521 (+2.5% per year) 30% 1,360

2.5% -0.6%

46% Traditional bioenergies are solely used in the residential sector as fuel to heat and cook, most often in rural zones and emerging Advanced bioenergies push countries 70% forward primary biomass usage (in other words cultivated biomass—energy 54% crops, algae, forests) to increase energy generation potential vs. biomass residues (animal, agriculture 2018 Advanced biomass Traditional biomass 2040 and municipal wastes)

Introduction – definition Traditional biomass Advanced biomass X% CAGR

21 Sources: World Energy Outlook 2019 (IEA); Kearney Energy Transition Institute

Kearney XX/ID Bioenergy development faces three main challenges

3 1 Biofuels maturity Sustainability constraints 2 Value chain complexity

22

Kearney XX/ID Biomass Sustainability constraints by advanced bioenergy generation harvesting and collection must meet standards to Sustainability constraints 1 Direct Generation Year Description Land use be sustainable competition Water use Soil erosion change with food

– Bioenergy produced from 1st edible crops (for example, oil ~ 1990 generation crops, sugar and starch crops) on arable land Sustainability 1 constraints – Bioenergy produced from non- 2nd edible crops and waste to ~ 2000 generation have a limited impact on food security Direct consequence is that bioenergy production is – Bioenergy produced from 3rd micro or macro algae, which intrinsically limited by the ~ 2015 generation have high yields and limited amount of sustainably land use impacts collectable biomass

– Bioenergy produced from 4th genetically modified crops to Future generation maximize yield and coupled with CCS technologies

Introduction – biomass sustainability challenges Scope of the factbook High constraint Medium constraint Low constraint No constraint

1 Year of maturity of the bioenergy production processes associated to the given feedstock generation 23 Source: Kearney Energy Transition Institute

Kearney XX/ID Biomass Schematic representation of advanced feedstocks-to-energy pathways processing has a wide diversity of Feedstocks Conditioning Pretreatment3 Intermediate Conversion Product possible routes Pretreatment/ Carbo- Anaerobic Ethanol, Animal waste enzymatic hydrates Fermentation which increases digestion butanol the complexity of hydrolysis (sugars) bioenergy project Hydrothermal Diesel, jet Agricultural Torrefaction Hydrotreatment upgrading Pyrolysis oil fuel, development residues and refining milling pyrolysis2 gasoline 2 Value chain complexity Syngas MSW Sorting, MBT1 Mechanical/ fermentation hexane Methanol All extraction

routes Fischer-Tropsch Forestry Torrefaction; possible 2 Mixed/ residues pyrolysis Gasification higher (cleaning and Syngas conditioning) alcohols Other catalysis/ refining

Anaerobic Algae digestion Methane

Energy Heat/ Torrefaction Incineration Heat/steam crops power Introduction – biomass processing routes 1 Mechanical biological treatment 2 Thermochemical process 3 Not included: anaerobic digestion leading to methane production and non-energy routes (for example, composting, landfill); specific additional processes between intermediate and conversion stage may be required (for example, separation of by-products) 24 Sources: IEA Bioenergy roadmap; Kearney Energy Transition Institute

Kearney XX/ID Conversion of A Harvesting/ B Processing C Biofuel biomass to energy collection consumption and consumption generally follows Feedstock collection on Feedstock transformation Use of the final product to three main steps production site in a final product generate energy – Mechanical (for example, lipid extraction) – Thermal (for example, Solid biofuel Animal Municipal torrefaction, gasification) (for example, waste solid waste Value chain complexity wood chips, 2 – Chemical (for example, pellets) Fischer-Tropsch) Heat – Biochemical (for example, Liquid biofuel Power Agricultural Algae anaerobic digestion, (for example, residues fermentation, and bioethanol, Motion composting) biodiesel) – Electrochemical conversion Gaseous biofuel Forestry Energy (for example, residues crops biomethane, syngas)

Introduction – definition

25 Source: Kearney Energy Transition Institute

Kearney XX/ID Harvest and Overview of the different sources of biomass A collection of biomass, called Biofuel Harvesting/collection Processing “feedstock” in this consumption

factbook, is the Agricultural Forestry Biofuel Conditioning first step to residues residues Solid Leftovers from crop Raw wood or wood produce harvests (for example, residues resulting from Liquid straw) or residues from forest management Gaseous bioenergy conversion processes practices (for example, bagasse) 2 Value chain complexity Animal Municipal pretreatment waste solid waste Waste resulting from Set of everyday items livestock farming (for discarded by the Pretreatment Six categories of feedstocks example, manure) and public after their initial are assessed in this report also animal remains use

Energy Algae crops Bioenergy Specific crops Micro and macroalgae Heat dedicated to bioenergy grown for bioenergy Power production in order to production because of Motion X Deep-dived minimize competition their high energy Conversion with food supply content Introduction – definition

26 Source: Kearney Energy Transition Institute

Kearney XX/ID Feedstock Processing methods general overview B processing toward biofuel includes Harvesting/ Biofuel Processing three sub-steps: collection consumption

conditioning, Biofuel Conditioning Pretreatment Intermediate Conversion pretreatment, and Solid conversion Liquid Sorting, MBT Pretreatment / Carbo hydrates Fermentation Gaseous hydrolysis (sugars) Chipping Value chain complexity Hydrotreatment Pyrolysis and refining 2 Pyrolysis/ oil Milling hydrothermal Not exhaustive upgrading Combustion Charcoal Drying Syngas Gasification fermentation Pelletization (cleaning and conditioning) Syngas Fischer- Torrefaction Tropsch Anaerobic Other Bioenergy digestion Heat Pyrolysis catalysis/ refining Power Motion X Deep-dived Heat/ Incineration Steam explosion steam Post- treatment Introduction – definition

Note: MBT is mechanical biological treatment. 27 Sources: IEA Bioenergy roadmap; Kearney Energy Transition Institute

Kearney XX/ID Eventually, Definition of the different biofuels C biofuels are consumed to Harvesting/ Processing Biofuel consumption produce energy in collection the form of heat, Any plant matter used directly as fuel or Conditioning – power, or motion converted into other forms before combustion, the most useful is charcoal Solid – Includes: Multitude of woody materials biofuels generated by industrial process or provided directly by forestry and agriculture (firewood, wood chips, bark, sawdust, shavings, chips, 2 Value chain complexity black liquor, animal materials/wastes)

pretreatment Motion – Liquid matter resulting from processed Power biomass feedstock Heat Pretreatment Liquid Three types of biofuels— biofuels – Includes: Biogasoline, bioethanol, biodiesels, bio jet kerosene, biobutanol, and solid, liquid, and gaseous— higher alcohol can be used to produce energy. We define liquid and – Gases composed principally of methane gaseous biofuels as and carbon dioxide produced by anaerobic “advanced biofuels.” digestion of biomass, or by thermal Gaseous processes biofuels – Includes: landfill gas, sludge gas, and other X Deep-dived biogases from anaerobic and thermal Conversion processes – H2 from gasification Introduction – definition

28 Source: Kearney Energy Transition Institute

Kearney XX/ID This diversity also Conditioning technologies maturity curve Pretreatment technologies maturity curve comes with disparities in the Pyrolysis processing TorrefactionBiomethanol Renewable Diesel Biomethanol Renewable Diesel Enzymatic hydrolysis Pelletizing Steam explosion Milling Biomethane Biomethane technologies and Biobutanol Sorting Biobutanol Gas from Waste GasGasification from Waste biofuels maturity Bio Jet fuel Drying Bio Jetfuel Hydrothermal Anaerobic Biodiesel Mechanical Biodiesel level upgrading digestion Bio gasoline Bioethanol Biogasoline and hexane Bioethanol Chipping extraction

Biofuels maturity

Capital requirement x technology risk technology x requirementCapital risk technology x requirementCapital 3 Maturity Level Maturity Level

Conversion technologies maturity curve Biofuels maturity curve

BiomethanolBio Renewable Dieseldiesel methanol Biomethane Biobutanol Biobutanol Gas from Wastewaste Fischer-Tropsch Bio jetJet fuel fuel Research Hydrotreatment Wood pellets Development Syngas Transesterification Wood chips Biodiesel Demonstration fermentation Fermentation Biogasoline Bioethanol Deployment Research Mature technology Charcoal Introduction - biomass

technologies maturity Deployment Mature Technology Capital requirement x technology risk technology x requirementCapital

Capital requirement x technology risk technology x requirementCapital Maturity Level Maturity Level 29 Source: Kearney Energy Transition Institute

Kearney XX/ID The attractiveness Technical of bioenergy relies – Energy efficiency on three main – Compatibility groups of criteria: – Maturity technical, – Infrastructure adaptability economic, and environmental

Economic

– Profitability – Competitiveness – Scalability The following opportunity – Public incentives assessment criteria will be used to evaluate the prioritized list of value chains

Environmental

– Life cycle GHG emissions and air quality – Biodiversity Introduction – biomass value – Circularity chain assessment criteria – Water and soil quality and stress

30 Sources: US Department of Energy (Picture), US Department of Primary Industries and Regional Development (Picture), Mongabay (Picture); Kearney Energy Transition Institute

Kearney XX/ID The objective of Key questions to assess biomass-to-energy value chain attractiveness the factbook is to assess biomass- to-energy value chain Value chain 1.1 Feedstock overview 1.2 Processing methods overview assessment What is the energy potential of What is the optimal feedstock x attractiveness and 1 biomass? processing method x biofuels combination? ability to respond – What are the different feedstocks available? – What are the existing processing methods characteristics? to climate change – What are the conditions to ensure sustainable harvesting and collecting – What are their stage of maturity? of biomass feedstocks?

Biofuels market 2.1 Attractiveness and maturity 2.2 Market drivers and corresponding opportunities and assessment enablers 2 enablers What is the optimal biofuel x market What are the market conditions that Thanks to chapter 1 and 2, segment combination? ease biomass-to-bioenergy development? we will be able to obtain the – What are the technical and environmental top combination feedstock x characteristics of biofuels? – What are biomass-to-bioenergy market drivers? processing methods x – What are the competitive advantages vs. biofuels x market segments fossil fuels or other renewable energy – What are the corresponding levers that we will then deep-dive in sources? to activate in order to increase attractiveness? chapter 3 – Which market segment is the most promising?

Conclusion: Introduction – objective of the successful Where and how successful business models exist? factbook 3 business models

31 Source: Kearney Energy Transition Institute

Kearney XX/ID Section 1

Biomass-to-bioenergy value chain assessment

32

Kearney XX/ID Introduction I. Biomass-to-energy value chain 1. Feedstock overview 2. Processing methods overview i. Conditioning technologies ii. Pretreatment technologies iii. Intermediate products iv. Conversion technologies II. Biofuels market opportunities and enablers 1. Attractiveness and maturity i. Product assessment—technical diagnosis ii. Competitive advantage assessment—economic diagnosis 2. Market drivers and corresponding enablers III.Conclusion: successful business models Appendix 33

Kearney XX/ID What is the energy potential of biomass? i. What are the main feedstocks available? ii. What are their characteristics? iii. How can those feedstocks be collected? Key questions iv. What are the conditions to ensure sustainable harvest and collection of biomass feedstocks?

34 Source: Kearney Energy Transition Institute Six feedstocks are Animal waste Forestry Agricultural assessed in this residues residues report: animal Waste from keeping livestock Primary residues from cultivation, Field residues including stalks, waste, forestry (solid and liquid manure) such as harvesting, or logging activities stubble, leaves, seed pods, and horses, cattle, pigs, sheep, or (for example, thinnings) and process residues such as husks, residues, poultry secondary residues from wood seeds, bagasse, molasses, and agricultural processing (for example, roots sawdust, wood chips, black residues, algae, liquor) MSW, and energy crops

Non-exhaustive

Algae Municipal Energy crops solid waste

Algae are chlorophyll-containing Waste collected and treated by or Short rotation coppice (poplar, organisms, ranging from for municipalities (includes willow, eucalyptus, and locus), ley microscopic microalgae to larger organic waste, paper and crops, energy cane, and macroalgae and distinguished cardboard, plastic, metal, glass perennial cultivation (miscanthus, from plants by the absence of and textiles, wood) or any similar switchgrass, reed canary grass, true roots, stems, and leaves; the waste from commercial and and other grasses) use of algae for bioenergy industrial sources purposes is still at an early stage Feedstock – definition of maturity

35 Sources: USDOE Billion Ton Report; Kearney Energy Transition Institute

Kearney XX/ID For each Methodology for the chapter analysis feedstock, three specific potentials Theoretical potential Technical potential Sustainable potential The physical theoretically Fraction of the theoretical Fraction of the technical are estimated: usable energetic potential of a potential that remains after potential intentionally limited Feedstock feedstock unavoidable losses due to by consideration of theoretical, technical restrictions (such as environmental, social, and harvesting and collection ecological aspects such as food technical, and efficiency or processing issues) security and competing resource uses sustainable Animal waste Energy embedded in the total Fraction of technical potential Fraction of theoretical potential Waste resulting from livestock quantity of animal excrement after removing unethical sources that can be practically collected farming (for example, manure) and and slaughter/processing facility or where fertilizer demand is not from fields and facilities also animal remains waste met Agricultural residues Energy embedded in the portion Fraction of technical potential Leftovers from crop harvests (for Fraction of theoretical potential of agricultural biomass after removing sources that can example, straw) or residues from that can be practically collected remaining after the primary be processed for the food value conversion processes (for example, from fields and facilities product is harvested chain or degrade soil quality bagasse) Fraction of technical potential Municipal solid waste Energy embedded in the total Fraction of theoretical potential that is new growth or waste from Set of everyday items discarded quantity of forest residues that can effectively be collected wood processes which can be Each of these feedstocks is by the public after their initial use produced deep-dived below and their sustainably reused Forestry residues Fraction of technical potential corresponding potential is Energy embedded in the total Raw wood or wood residues Fraction of theoretical potential after removal of recycled amount of municipal solid waste assessed resulting from forest management that can effectively be collected fraction (for example, paper, produced practices plastic) Fraction of technical potential Algae Energy embedded in the total after removing sources that Specific crops dedicated to Fraction of theoretical potential amount of land and marine compete with other uses or do bioenergy production in order to that can effectively be collected algae produced not meet sustainable water use maximize the yield requirements X Deep-dived Fraction of technical potential Energy crops Energy embedded in the total Fraction of theoretical potential after removing sources that Specific crops dedicated to amount of biomass grown in the that can be effectively gathered compete with food and feed bioenergy production energy crop Feedstock – methodology crops or which impact land use

36 Source: Kearney Energy Transition Institute

Kearney XX/ID There are large Biomass feedstocks overview disparities in World, 2060, IEA Technology Roadmap energy potential Energy Technical Sustainability Theoretical, technical, and GHG1 and GHG content challenges requirements sustainable potentials (Mtoe) (gCO2e/MJ) emissions (MJ/kg) – Difficult manure – Interferences with waste 100% 1,650–2,000 3–5 between Animal 6–8 collection and lack of competing uses (liquid and solid) 35% 575–725 feedstocks treatment facilities (fertilizer) 7% 100–150 – Crop burning – Interference with Agricultural preventing residue competing uses 100% 2,100–4,375 11–17 5–11 residues collection (fertilizer, food or 69% 1,450–3,050 bedding for cattle) 52% 1,100–2,275

– Highly distributed – Fragile and sensitive Forestry resource forests protection 10–16 – Policies increasingly – Overtaking of trees 100% 2,275–4,710 3–6 residues aiming to achieve growth pace 45% 1,025–2,120 zero deforestation 15% 350–725

These disparities are linked – Increase of recycling – Interference with Municipal policies recycling to their production conditions 4–10 100% 450–700 0.5–1 solid waste – Processing facilities 83% 375–575 and requirements to ensure pollutants emissions sustainability and can only 52% 225–375 be precisely assessed – Early stage – High water and locally. feedstock nutrients Algae 18–19 – Competing uses in requirements Data missing 18–40 the chemical and food industries

Energy – Good predictability – Potential for land 100% 2,950–4,950 10–16 and control of supply use change 70% 2,075–3,450 13–14 crops volume 48% 1,425–2,400

Feedstock – results Theoretical potential Technical potential Sustainable potential X% Share of theoretical potential 1 GHG emissions gCO2eq/MJ of feedstock energy content. Only emissions related to feedstock production are accounted here. Direct (related to feedstock final use) and indirect emissions are not taken into account here. Production-related emissions are split in feedstock generation-related emissions and transport-related emissions, only generation accounted for animal waste and algae, only transport for MSW. Sources: Kearney, Technology Roadmap - Delivering Sustainable Bioenergy (IEA), USDOE Billion Ton Report (2016), USDOE Billion Ton Report Volume 2 (2016), FAO Tackling Climate Change through livestock 37 (2013), Xin et al. - An Empirical Study on Greenhouse Gas Emission Calculations Under Different Municipal Solid Waste Management Strategies (2020), Kearney Energy Transition Institute

Kearney XX/ID Animal waste is Animal waste examples: manure and renderings waste generated Manure Renderings by cattle and slaughterhouse – Manure is an organic matter – Leftover animal products and grease that are – Most manure consists of animal feces, other turned into stable and usable tallow sources include compost and green manure – Tallow is a stable grease; it is high-quality – Manure use for bioenergy is in competition biomass feedstock because of its high fat with its traditional use as organic fertilizer in content that can be processed into biodiesel agriculture or refined liquid hydrocarbons – Manures contribute to the fertility of soil by adding organic matter and nutrients, such as nitrogen

Illustrative

Animal waste – deep-dive

38 Sources: Kearney Energy Transition Institute

Kearney XX/ID Based on Overview Sustainability constraints pretreatment Supply characteristics: Competing – Use of animal waste as fertilizer, which is its requirements, low – Directly linked to number of livestock units and collection rates demand segments most prevalent application – Limited variability due to seasonality, weather, and so on – Portion of manure applied to soil is necessary Soil quality collection rates, – Exposed to changes in demand of animal products such as meat, to maintain soil fertility dairy, wool – Nitrogen, phosphorus, and pathogen content Water quality and distributed – Challenging collection mechanisms and distributed supply of manure can affect water quality network supply, scalability Conversion technologies: – Ammonia emissions of manure can volatilize and have an adverse impact on air quality – Anaerobic digestion and incineration are the only viable solutions Air quality of animal waste is because of feedstock low energy density and high moisture – Emissions of manure used as household fuel (for example, dry dung cakes) can be limited – No economically viable conversion or conditioning process to hazardous to health decrease the transport or storage costs of animal waste Land use change Regulations: – No risk for food competition and very limited and food risk for land use – Anaerobic digestion has experienced regulatory support competition – Carbon taxes have benefitted producers of animal waste but regulations vary across countries XX Main sustainability criteria

Organic content 50–95% (% Carbon) Animal waste feedstock total potential Ash content 20–60% (%) 2060, Mtoe, world Manure left on field or not Moisture content 50–95% (undried) 1,650–2,000 treated, mainly because of (% mass) lack of treatment facilities Manure used as fertilizer and unethical Fixed carbon Data missing (%) -65% exploitation practices 12–25 cattle/pig 100% 575–725 Biogas yield slurry -29%1 (m3/t) 100–150 30–100 poultry Theoretical Technical Sustainable Bulk density 513–1000 (kg/m3) – Total quantity of animal – Manure can be treated – Current manure application Energy content 6–8 MJ/kg excrement and slaughter/ through various management rates as fertilizer are processing facility waste systems such as lagoons, dry assumed to be in line with Animal waste – deep-dive – Multiplied by corresponding lots, digesters, or solid recommended rates for energy content storage tanks sustainability 1Percentage based on the theoretical potential 39 Sources: Technology Roadmap – Delivering Sustainable Bioenergy (IEA), Food and Agriculture Organization – Environmental impact of manure, FAOSTAT, EPA; Kearney Energy Transition Institute

Kearney XX/ID Agricultural Agricultural residues examples: straw and rice husks residues include a Straw Rice husks wide variety of – Straw is an agricultural by-product consisting – Rice husks are the hard protective coverings field and process of the dry stalks of cereal plants after the of rice grains residues grain has been removed – Husks can be separated from rice manually – Straw can be collected using machines using a technique called winnowing, or thanks transforming it into straw bales to a hulling machine – Straw is considered a field residue, a material – Rice husks are a kind of process residues left in an agricultural field or orchard after the crop has been harvested

Illustrative

Agricultural residues – deep-dive

Sources: ETIP Bionergy, Global Wood Chip Trade for Energy (IEA Bioenergy), Woodchip Heating Fuel Specifications in the Northeastern United States (BERC), Rice Knowledge Bank; Kearney Energy Transition 40 Institute

Kearney XX/ID As by-products of Overview Sustainability constraints food crops, Supply characteristics: – Food or bedding for cattle which has a low – Distributed supply limited by high equipment cost, traditional crop Competing environmental impact and is coherent with agricultural burning practices, and competing uses demand segments circularity principles – By-product of a necessary commodity lowering sustainability risks – Use for horticultural purposes or as compost residues are – US, China, and Brazil are current supply hotspots with markets – Residue removal required to protect the soil such as India pushing regulations to reduce crop burning and Soil quality and water and ensure long-term productivity abundant with low encourage bioenergy sustainability risks Conversion technologies: – Agricultural residues limit the use of fertilizers – High lignin content requires conditioning or pretreatment Water and air and other pollutants when used as compost – Fermentation to ethanol or thermochemical conversion to other quality – Neutral impact on freshwater resources and energy biofuels products such as biodiesel and bio jet fuel access Regulations: – Regulations impacting land use change—including restrictions on Land use change – No direct competition with food security but agricultural land—may impact future feedstock supply potential and food possible impact on land use rights and usage, – Decarbonization targets, net carbon impact policies, and carbon competition directly and indirectly credit incentives may support crop growth and wider production of biofuels as substitutes for fossil alternatives XX Main sustainability criteria

Organic content 40–50% (% Carbon) Agricultural residues feedstock total potential Ash content 8–21% (%) 2060, Mtoe, world Crop burning and Competing uses residues left on field (bedding, food, Moisture content 5–30% 2,275-4,710 (% mass) horticulture) -31% 1,450–3,050 Fixed carbon 9–21% -17%1 1,100–2,275 (%) 100% Biogas yield 160–600 (m3/t) Theoretical Technical Sustainable Bulk density 15–200 (kg/m3) – Portion of agricultural – Crop burning is one of the main barriers to – Fraction of technical potential Energy content 11–17 MJ/kg biomass remaining after residue collection; its use is widespread for its after removing competing uses primary product low cost and ability to eliminate weed and pests and sources that can’t be Agricultural residues – deep-dive harvesting – FAO recommends 25% of residues to be left on processed for the food value field chain or degrade soil quality 1Percentage based on the theoretical potential 41 Sources: Technology Roadmap – Delivering Sustainable Bioenergy (IEA), Ramboll, IEA, EPA, FAOSTAT; Kearney Energy Transition Institute

Kearney XX/ID Forestry residues Forestry residues examples: thinnings, sawdust, and wood chips come from wood Thinnings Sawdust Wood chips harvesting and – Thinning refers to the – Sawdust is composed of – Wood chips are wood transformation selective removal of trees, fine particles of wood pieces (between 5 and processes which is undertaken – It is a by-product or waste 50 mm) produced by notably to improve the product of woodworking mechanical treatment growth rate or health of the operations such as – They can be split into trees remaining in the sawing, milling, planing, forest chips, wood residue forests routing, drilling, or sanding chips, sawing residue – Several thinning methods – Sawdust can be produced chips, and short rotation can be applied in function by woodworking forestry chips of the objective sought machineries or tools (thinning from below or above to trees selected on Illustrative their size, diameter-based thinning, and so on)

Forestry residues – deep-dive

42 Sources: Northern Arizona University, Wood Dust and Formaldehyde (World Health Organization IARC), Forest Research UK; Kearney Energy Transition Institute

Kearney XX/ID Forestry residues Overview Sustainability constraints supply is highly Supply characteristics: Competing – Secondary wood products: wood manufactured – Highly distributed supply with low collection rate and high transport demand segments products, construction materials, and so on distributed and costs especially for primary residues – Complex sustainability considerations (see sustainability – Residues removal (either from clear cuts or exposed to severe constraints) Soil quality thinnings) can alter soil quality and habitat – Supply, although abundant, is exposed to natural disasters, longevity and reduce soil carbon levels sustainability weather, seasonality, and other long-term climate changes – Forests are home to abundant biodiversity Conversion technologies: – Protected, and environmentally sensitive forest risks—especially – Conditioning methods such as chipping, pelletization, torrefaction lands to be excluded from exploitation – Pathways to power (for example, incineration) are the most widely – Production and harvest systems need to be Biodiversity in terms of performed because of their low cost adapted to wood species, timber size, and land – Advanced conversion to fuels also achieved scalability in limited condition to minimize impacts biodiversity cases – Necessity to restrict harvest levels to ensure Regulations: that tree growth exceeds harvest – Heterogeneity of policies resulting from multiple forestry protection regulations at federal, state, and municipal levels – Higher residues and wood use can induce land – Increase of regulations mandating higher residues collection rates Land use change use change detrimental to carbon – Forestry policies increasingly aim to achieve zero deforestation and sequestration and forest biodiversity protection increase carbon sequestration detrimental to forest exploitation XX Main sustainability criteria

Organic content 40–50% (% Carbon) Forestry residues feedstock total potential Ash content 1–12% 2060, Mtoe, world (%) Low collection rates since Limited collection to not highly distributed and hardly overpass forest growth Moisture content 30–45% 2,100-4,375 (% mass) accessible feedstock rate and respect wood residues competing uses Fixed carbon -55% 12–19% 1,025–2,120 (%) 100% -30%1 350–725 Biogas yield 150–450 (m3/t) Theoretical Technical Sustainable Bulk density 150–265 (kg/m3) – Total quantity of forest – Wood residues collection conditioned – Average rotation cycle of forest wood is 15 Energy content 10–16 MJ/kg residues produced in the by road access, topographical years world constraints, and forest density – Uniform distribution of tree implies one-fifteenth Forestry residues – deep-dive – Process residues collection limited to of total biomass to be new growth every year non-hazardous wood residues making use of only that portion sustainable 1Percentage based on the theoretical potential – Very few competing uses for wood residues 43 Sources: Technology Roadmap – Delivering Sustainable Bioenergy (IEA), Biomass and Bioenergy Journal, FAO, IRENA, USDOE Billion Ton Report (2016); Kearney Energy Transition Institute

Kearney XX/ID Municipal solid Municipal solid waste example: food and paper waste waste is waste Food waste Paper collected from – Food waste is an organic fraction of municipal – Paper and cardboard waste can be used as final product solid waste coming from discarded food items biomass feedstock; they have high carbon consumption because they are spoiled or in excess content and low moisture (excluding – Food waste can be collected at any step of – Their use as biomass feedstock is competing the food supply chain: production, processing, with recycling application and is usually commercial and retail, and consumption preferred regarding the circularity principle industrial waste)

Illustrative

MSW – deep-dive

44 Source: Kearney Energy Transition Institute

Kearney XX/ID Waste-to-energy Overview Sustainability constraints Supply characteristics: – Increasing conversion of waste recycling into pathways are reusable materials receiving growing policy – Negative feedstock cost coming from treatment/disposal social support function Competing attractive but – Open/unmanaged landfills: causing demand segments – Increase of total waste per capita, notably in developing countries environmental and health hazard policies are – Centralized waste management (for example, city councils) – Biogas recovery: use of landfill to capture easing its collection biogas from natural decomposition of waste expected to make Conversion technologies: – Limits landfill-related methane emissions (for recycling more – Anaerobic digestion and industrial composting GHG emissions example, landfills are the third-largest source of – Incineration, which has low feedstock quality requirements and human-related methane emissions in the US) can be an attractive disposal solution, particularly if combined with compelling in the CCS Soil and water – Recycling limits issues associated with waste quality disposal such as ground water contamination – Other technologies like gasification or Fischer-Tropsch process long term having stricter feedstock quality and pre-processing requirements – Gases and ashes from incineration may contain Regulations: heavy metals and other toxins causing air – Stricter regulation diverting waste away from landfill and Air quality pollution and contributing to acid rain ambitious targets to increase recycling rates – Impact of processing facilities on air quality in proximity of inhabited areas – Policies enforcement to improve health and sanitation in developing countries XX Main sustainability criteria

Organic content 9–57% (% Carbon) Municipal solid waste feedstock total potential Ash content 4–28% (%) 2060, Mtoe, world Waste not collected or Waste recycled in forms impossible to recycle other than energy Moisture content 37–61% (% mass) 450-700 -17% 375–575 Fixed carbon Data missing -31%1 225–375 (%) 100% Biogas yield 100– 50 (m3/t) Theoretical Technical Sustainable Bulk density 180–260 (kg/m3) – Total amount of municipal solid – Fraction of theoretical potential that – Fraction of technical Energy content 4–10 MJ/kg waste produced in the world can effectively be collected within a potential after removal of – Waste generated per person specific region fraction recycled in forms MSW – deep-dive per day averages 0.74kg but – % of waste collected is notably linked other than energy (for varies from 0.11kg to 4.54kg to GDP per capita and government example, paper, plastic) 1Percentage based on the theoretical potential focus 45 Sources: Technology Roadmap – Delivering Sustainable Bioenergy (IEA), World bank, United Nations, World Energy Council, Ramboll; Kearney Energy Transition Institute

Kearney XX/ID Algae are micro Algae cultivation for bioenergy production and macro Open systems photobioreactors Closed systems photobioreactors organisms that – Cultivation design of choice for the vast – Objective to limit waste of water and nutrients rapidly grow in majority of commercial algae biomass by opting for a closed system water from production globally – Theoretical higher process efficiency allowing photosynthesis – Less expensive to build and operate than energy-efficient downstream processing closed photobioreactors and have – Viable solution only for high-value markets demonstrated commercial scale-up capability (for example, food supplements, cosmetics) because of high costs

Illustrative

Algae – deep-dive

46 Sources: USDOE Billion Ton Report; Kearney Energy Transition Institute

Kearney XX/ID Algae are Overview Sustainability constraints promising but still Supply characteristics: – Food industry: algae can be served as food or used as a soil fertilizer – Diversity of species from simple unicellular cyanobacteria to Competing immature and complex multicellular macroalgae (seaweeds) demand segments – Chemical industry: pigments produced by – Early stage technology not mature and fully scalable yet algae can be used as alternatives to chemical require strict dyes and coloring agents Conversion technologies: regulations – CO2 is a key nutrients for algal growth (with – Algal lipid extraction and upgrading (ALU) or hydrothermal GHG emissions nitrogen and phosphorus) but has to be because of high liquefaction (HTL) mitigated by the production related emissions Regulations: water – Grants and R&D support (Horizon 2020 and FP7 programs in the – High volumes of water and nutrients required to ensure commercial production of algae EU, various projects in the US, CO2-Microalgae-Fuels Project in Water use requirements China) – Effective water recycling essential to minimize – Algae supported as part of general bioenergy policies in the most water and chemical nutrients consumption mature markets (for example, EU capping on agricultural crops- – Importance of cultivation site choice (climate, based biofuels production to foster advanced biofuels including Land use change algae) slope, water and nutrient sources proximity) XX Main sustainability criteria

Organic content 45–50% (% Carbon) Algae feedstock total potential Ash content < 10% (%) Moisture content 80–90% (% mass) (undried)

Fixed carbon Data missing (%) Algae extraction technologies still early stage Biogas yield 287–611 No theoretical, technical, and sustainable (m3/t) potential estimates are available at a world level Bulk density 250–550 (kg/m3) (macroalgae) Energy content 18–19 MJ/kg Algae – deep-dive

Sources: Kearney analysis, Technology Roadmap – Delivering Sustainable Bioenergy (IEA), IEA Bioenergy – State of Technology Review Algae Bioenergy (2017), Milledge et al., Macroalgae-Derived Biofuel: A 47 Review of Methods of Energy Extraction from Seaweed Biomass, Kearney Energy Transition Institute

Kearney XX/ID Energy crops are Energy crops examples non-edible crops Miscanthus Energy cane specifically grown – Miscanthus is a non-edible crop characterized – Energy cane is sugarcane genetically for bioenergy uses by its high biomass yield and rapid growth (up modified to become more productive for to 4 meters by season) biofuel and energy production – It is considered as one of the most promising – Ability to be planted in areas with low options to provide bioenergy agricultural capability to limit its impact on – However, miscanthus appears as a potentially food production invasive species – It is also designed to require less water and less inputs to grow

Illustrative

Energy crops – deep-dive

48 Sources: USDOE Billion Ton Report, GranBio, Miscanthus France; Kearney Energy Transition Institute

Kearney XX/ID Energy crops are Overview Sustainability constraints – Use as food or feeding for animals is the only promising but can Supply characteristics: significant competing alternative – Supply predictability and control in spite of exposure to natural Competing – Specific energy crops are increasingly being have a detrimental hazards demand segments used for other applications (for example, – Yield of energy crops is highly reliant on specific crop, local miscanthus as “green” building material) but impact on food by weather, soil content and quality, and therefore on site selection adoption remains low – Considerations around sustainability such as competition with – Management of residue removal to protect the changing land Soil quality food crops for land use are particular risks, especially in markets soil, maintain its carbon and nutrient content allocation with a food production deficit – Most commonly used energy crops are willow and miscanthus Water and air – Crops requires fertilizers and other pollutants Conversion technologies: quality – Possible impact on water resources – High lignin content requires conditioning or pretreatment – Limit energy crops to non-agricultural land – Fermentation to ethanol or thermochemical conversion to other (either arable, pasture) to avoid arable crops energy biofuels products such as biodiesel and bio jet fuel Land use change or livestock displacement and food – Strictly enforce Indirect Land Use Change Regulations: competition (ILUC) mitigation measures to ensure the land – Regulations on land use change—including restrictions on energy grown on avoids food competition crop plantations and other sustainability factors—impact – High GHG emissions for production feedstock potential XX Main sustainability criteria

Organic content 40–50% (% Carbon) Energy crops feedstock total potential Ash content 1–6% 2060, Mtoe, world Land used for (%) Crops left on field purposes other than and crop losses Moisture content 10–20% 2,950-4,950 energy crops (% mass) cultivation -30% 2,075–3,450 Fixed carbon 10–19% -22%1 1,425–2,400 (%) 100% Biogas yield 150–450 (m3/t) Theoretical Technical Sustainable Bulk density 50–264 (kg/m3) – Energy crops include short – ~25% of feedstock left on field – Fraction of technical potential after Energy content 10–16 MJ/kg rotation crops (for example, for crop renewal and ~5% removing sources that compete with willow), as well as energy losses food and feed crops or impact land Energy crops – deep-dive cane and perennial cultivation – Crops losses are biotic (weeds use (for example, miscanthus) or pests) and abiotic (lack of – Elimination of land used for temporary 1Percentage based on the theoretical potential water, inadequate temperature) or permanent meadows and pasture 49 Sources: Technology Roadmap – Delivering Sustainable Bioenergy (IEA), FAO, Global Agro-Ecological Zones Portal, DEFRA UK; Kearney Energy Transition Institute

Kearney XX/ID In total, one-third Feedstock energy potential by feedstock type of the global World, 2060, % of theoretical potential, Mtoe1 theoretical 100% biomass potential would be Feedstock not gathered or collected sustainably 30% exploitable in 2060 -41% Feedstock competing 4% with other uses2 59%

27% 36% -24%

Biomass feedstock supply is 6% 35% strongly linked to the food industry with about 70% of 25% 20% 42% the sustainable supply 7% coming from agricultural 12% residues and energy crops 29% 14% 37% 8% 3% Theoretical Technical Sustainable

Feedstock – results Energy crops Municipal solid waste Forestry residues Agricultural residues Animal waste 1 Algae are not taken into account because there exists no world estimate of their theoretical, technical, and sustainable potentials as it is still an early stage technology. 2 Feedstock potential already used for other purposes is deducted from the technical potential to determine the sustainable potential because its use for bioenergy purposes would induce an additional pressure on the resource which could lead to feedstock depletion. 50 Sources: Technology Roadmap – Delivering Sustainable Bioenergy (IEA), USDOE Billion Ton Report (2016); Kearney Energy Transition Institute

Kearney XX/ID Agricultural Feedstock energy potential by feedstock type residues and World, 2060, Mtoe energy crops will 2,950–4,950 be the two main sources of 2,100–4,375 biomass supply by 2,275–4,710 2060

1,650–2,000

1,425–2,400 1,100–2,275 450–700

350–725 225–375 100–150 Animal waste Municipal solid waste Forestry residues Agricultural residues Energy crops

Feedstock – results Theoretical non-technical Technical non-sustainable Sustainable

51 Sources: Technology Roadmap – Delivering Sustainable Bioenergy (IEA), USDOE Billion Ton Report (2016); Kearney Energy Transition Institute

Kearney XX/ID As a result, Bioenergy potential vs. world energy demand1 bioenergy could World, 2060, Mtoe 20,150 sustainably supply (141%) ~25% of the world energy demand in 2060

9,400–16,700

- 41%

5,500–9,900 With feedstock supply being limited, their allocation in the - 24% biomass-to-bioenergy needs 3,200–5,900 to be focused on decarbonizing sectors with no other renewable 16%–29% alternatives options.

Bioenergy Bioenergy Bioenergy World energy theoretical technical sustainable demand 2060 potential potential potential Feedstock – results

1 Potentials calculated in this section account for the “raw” energy embedded in the feedstocks. A more accurate comparison would take into account the difference between the energy embedded in the different feedstocks and the energy content of the biomass-derived fuels. 52 Sources: IEA WEO 2019, IEA Energy Technology Perspectives 2017, Technology Roadmap – Delivering Sustainable Bioenergy (IEA), USDOE Billion Ton Report (2016); Kearney Energy Transition Institute

Kearney XX/ID The future Bioenergy sustainable potential vs. energy by sector bioenergy World, Mtoe, 20181 potential is enough to power 40% CO2 16% CO2 either the entire 5,494 transport, 3,200–5,9002 3,200–5,900 buildings, or Energy Transport 2,750 industry sector 220 83

4% 83% 3% 165%

23% CO2 21% CO2

3,200–5,900 3,200–5,900 Industry 2,900 Buildings 3,100

744 203

7% 157% 24% 147%

GHG emissions reduction % of current bioenergy % of sustainable bioenergy %CO2

Current sector energy consumption Current bioenergy share in sector consumption Future sustainable potential bioenergy consumption Feedstock – results 1 The sum of energy demands in the different subsectors does not exactly match the total of the previous slide because this chart also considers the secondary products (heat, electricity) consumed in the transport, industry, and buildings sectors. 2 The value of bioenergy potential in 2060 is based on the mean of the range displayed (3,200–5,900 Mtoe), 2060 figures were used because of the lack of consensus on today’s bioenergy sustainable potential. 53 Sources: World Energy Outlook 2019 (IEA), Technology Roadmap – Delivering Sustainable Bioenergy (IEA); Kearney Energy Transition Institute

Kearney XX/ID Introduction I. Biomass-to-energy value chain 1. Feedstock overview 2. Processing methods overview i. Conditioning technologies ii. Pretreatment technologies iii. Intermediate products iv. Conversion technologies II. Biofuels market opportunities and enablers 1. Attractiveness and maturity i. Product assessment—technical diagnosis ii. Competitive advantage assessment—economic diagnosis 2. Market drivers and corresponding enablers III.Conclusion: successful business models Appendix 54

Kearney XX/ID For each biofuel, what is the best combination of processing method and feedstock? i. What are the technical and economic characteristics of the existing processing methods? Key questions ii. What are their level of maturity and future potential? iii. What are the most suitable feedstocks for each existing processing method?

55 Source: Kearney Energy Transition Institute Processing History of biomass processing technologies technologies for advanced biomass Hydrocracking First commercial were discovery in version of pyrolysis Germany batch systems for commercially gasification developed during Commercial Bischof creates development of Bell Laboratories the first the 20th century the first Fischer-Tropsch initiated research hydrothermal commercially reaction is on pyrolysis upgrading used gasifier in discovered France usefulness plant

Non-exhaustive 1778 1840 1880 1900 1915 1920s 1940s 1950 1958 1970s 1996 1997

Discovery of Hydrothermal methane from Transesterification First commercial upgrading anaerobic is patented by gasification plant process is digestion by Colgate in the US proposed Alessandro Volta

First commercial Hydrothermal hydrocracking upgrading process is unit developed Processing methods – introduction Technical achievement Commercial development Discoveries

56 Source: Kearney Energy Transition Institute

Kearney XX/ID Today, Technology maturity curve for bioenergy processing methods technologies also used to transform conventional resources are Pyrolysis Enzymatic hydrolysis more mature than Torrefaction Gasification those mainly Milling Pelletizing Steam explosion applicable to Sorting Drying biomass Syngas fermentation Hydrotreatment Hydrothermal upgrading Mechanical and hexane Chipping extraction Fischer-Tropsch Transesterification Those technologies’ Anaerobic digestion Fermentation technical characteristics and economics are detailed in Incineration

Appendix. technology xrequirement Capital risk Lab Bench Pilot Large- and commercial-scale Widely deployed work scale scale projects with ongoing optimization commercial-scale projects

Research Development Demonstration Deployment Mature technology

Maturity Level Processing methods – introduction Conditioning pretreatment Conversion

57 Sources: Advanced Biofuel Feedstocks – An Assessment of Sustainability (ARUP); Kearney Energy Transition Institute

Kearney XX/ID Bioenergy relies From biomass to biofuels on multiple possible combinations of Conditioning Pretreatment Intermediates Conversion Biofuels Mechanical or thermal Intermediate feedstock and Chemical or thermal Chemical or thermal treatment of raw product derived treatment of conditioned treatment of pretreated Fuel that is derived biomass to improve its from biomass conversion biomass to isolate biomass to convert from biomass density or quality before feedstock to be intermediates or products intermediates into final feedstock use or further converted into pathways before use or conversion biofuel products processing biofuel

Enzymatic Sorting Carbohydrates Fermentation Biomethanol hydrolysis Bioethanol Chipping Gasification SynSyngas gas fermentationfermentation Biobutanol Bio syngas Hydrothermal Torrefaction Fisher-Tropsch BioBio Jet jet Fuelsfuels upgrading Each one of those technologies and products is Bio oil Renewable diesel deep-dived in fact cards (see Milling Pyrolysis HydrotreatmentHydro-treatment and & refining Appendix). Biogasoline Lipids MechanicalMechanical/hexane / hexane Drying Biodiesel extraction Transesterification HydrogenHydrogen1 PelletisationPelletization and Anaerobic digestion Steam reforming briquetting Biogas

Processing methods – scope Steam Explosionexplosion Incineration Biomethane of analysis Feedstock compatibility Animal waste Agricultural residues Forestry residues Municipal solid waste Algae Energy crops 58 1. Hydrogen value chain is assessed in an other FactBook “Hydrogen-based energy conversion” https://www.energy-transition-institute.com/insights/hydrogen-based-energy-conversion, thus we only mention it as a product of gasification but do not detail this here Sources: IEA Bioenergy roadmap; Kearney Energy Transition Institute Kearney XX/ID Despite the variety Processing biomass: example of algae processing routes of conversion routes for a given feedstock, Conditioning Pretreatment Intermediates1 Conversion Biofuels intermediates act Carbohydrates Alcohols as a bottleneck in Enzymatic hydrolysis (fermentable Fermentation (ethanol, butanol) the processing sugars) chain Transesterification Biodiesel Fast pyrolysis

Drying Hydrothermal Oil upgrading Illustrative Liquid Hydrothermal hydrocarbons For instance, from algae, liquefaction Pyrolysis numerous pretreatments are Milling specifically producing oil that can be further refined in liquid hydrocarbons or Hexane extraction Organic residues Carbonization Biochar biodiesel.

Pathway toward alcohols Pathway toward biodiesel/liquid hydrocarbons Pathway toward solid biofuels Anaerobic digestion Biogas, digestate

Processing methods - example

1 Intermediates are preferred based on the largest fraction of interest in the feedstock; for example, if the feedstock is rich in fat or oil conditioning and pretreatment will be designed to extract this fraction of interest. Algae present two fractions of interest, the ratios of which can vary by species: carbohydrates (sugar) and lipids (oil). Based on the intermediate targeted, different routes are chosen. 59 Source: Kearney Energy Transition Institute

Kearney XX/ID Intermediates are Carbohydrates Bio syngas

segmentation Conditioning Pretreatment Intermediates Conversion Biofuels Conditioning Pretreatment Intermediates Conversion Biofuels points: they can be produced from Sorting Sorting Biomethanol Chipping Chipping Syngas Bioethanol fermentation Gasification most feedstock Biomethanol Torrefaction Torrefaction Biobutanol

Enzymatic Hydro- but determine the Carbohydrates Fermentation Bioethanol Bio syngas Milling hydrolysis Milling thermal obtained biofuel upgrading Drying Drying Renewable Biobutanol diesel Pyrolysis Pelletization Pelletization Fischer- Bio jet fuel briquetting briquetting Tropsch Biogasoline Steam Steam explosion explosion

Bio oil Lipids

Conditioning Pretreatment Intermediates Conversion Biofuels Conditioning Pretreatment Intermediates Conversion Biofuels

Sorting Renewable diesel Hydro- Chipping treatment Bio jet fuel Gasification Sorting refining Torrefaction Renewable Biogasoline diesel Milling Hydro- Hydro- Mechanical/ Milling thermal Bio oil treatment Bio jet fuel hexane Lipids upgrading refining Drying extraction Drying Biogasoline Steam Processing methods – Pyrolysis explosion Trans- Biodiesel intermediates Pelletization esterification briquetting

Steam 60 explosion Source: Kearney Energy Transition Institute Kearney XX/ID Based on the Overview of four types of intermediates targeted interest fraction, Carbohydrates Biosyngas intermediates are selectively Definition Definition – Molecules composed of atoms of – Gas produced through gasification; extracted from carbon, hydrogen, and oxygen with mainly composed of carbon two hydrogen atoms for one oxygen monoxide, hydrogen and carbon biomass and can atom (chemical formula Cm(H2O)n) dioxide be converted into Pretreatment obtained from Pretreatment obtained from – Hydrolysis – Gasification biofuels Compatible conversion processes Compatible conversion processes – Fermentation – Syngas fermentation – Fischer-Tropsch

There are four different kinds of intermediate products: carbohydrates, biosyngas, Pyrolysis oil Vegetable oils and fats oils, and lipids (fats) Definition Definition – Fuel obtained after pyrolysis; studied – Vegetable oils and fats are lipids as a potential substitute for petroleum isolated after hydrothermal upgrading Pretreatment obtained from or mechanical extraction – Pyrolysis Pretreatment obtained from Compatible conversion processes – Hydrothermal upgrading – Hydrotreatment and refining – Mechanical/hexane extraction Processing methods – Compatible conversion processes intermediates – Hydrotreatment and refining – Transesterification 61 Sources: Apanews (Picture), CBT Oil (Picture), Clariant (Picture), Indiamart (Picture); Kearney Energy Transition Institute

Kearney XX/ID The assessment of Processing methods assessment methodology feedstock to biofuel pathways is a two-step Criteria Definition and objectives Output Final result approach – Feedstocks are assessed based on their intrinsic characteristics (compatibility, 1 rentability, efficiency, availability, Feedstock to sustainability) giving a suitability Ranking of intermediate regarding processes toward a given feedstock and intermediate selection of the performance most suitable by assessment – A fact card with technical details and processing corresponding rate is produced for each methods given a relevant conditioning and pretreatment targeted Feedstock x process intermediate processing method x biofuel optimal – Conversions are assessed based on 2 combination their compatibility, efficiency, rentability, and sustainability for an intermediate Intermediate regarding a given biofuel Ranking of the to biofuel conversion performance – Maturity level (in other words, room for methods and assessment efficiency increased) of each conversion selection of the process is used as a proxy to put the most suitable by process performance rates in a dynamic biofuels perspective Processing methods - assessment methodology

62 Source: Kearney Energy Transition Institute

Kearney XX/ID Conditioning and Conditioning and pretreatment technologies and feedstock compatibility pretreatment turn raw biomass into intermediate, Feedstocks suitable matter for conversion

1 Sorting 2 Torrefaction 1 3 Chipping 4 Drying

5 Pelletization and briquetting Conditioning 6 Milling Conditioning and methods Processing pretreatment methods 7 Steam explosion change feedstock physical 1 Enzymatic hydrolysis properties to increase the efficiency of conversion 2 Pyrolysis processes toward biofuel. 3 Anaerobic digestion 4 Mechanical and hexane extraction

Pretreatment 5 Gasification

Conditioning and pretreatment methods Processing 6 Hydrothermal upgrading – results X Detailed Applicable Optimal conditioning x feedstock combination

63 Source: Kearney Energy Transition Institute

Kearney XX/ID Most conditioning methods are applicable to a wide variety of 1 feedstocks and can significantly improve value chain attractiveness

View of biomass conditioning technologies

Sorting Torrefaction Chipping Drying Pelletization Milling Steam explosion

Forestry and Forestry and Forestry and Energy crops, MSW, residues Forestry and agricultural residues, agricultural residues, agricultural residues, agricultural and Feedstock applicability (agricultural and agricultural residues, Forestry residues energy crops, algae, energy crops, and energy crops, algae, forestry residues, forestry) energy crops and animal waste MSW and animal waste algae Global production Maturity index rating1 Deployment Demonstration Mature Deployment Deployment Demonstration Demonstration dynamics

Main biofuel None Charcoal Wood chips None Wood pellets None None generated

Conversion efficiency2 35% 96% ≈ 90% ≈ 100% ≈ 100% Data missing ≈ 80%

Capex Medium High Low Low Medium Medium Medium Production economics Labor Maintenance costs Maintenance costs Energy use Opex drivers3 Energy use Energy use Maintenance costs Maintenance costs (knives and blades) Energy use Maintenance costs Maintenance

Overall attractiveness4

Conditioning – results 1 Maturity of the process is given for its specific application to biomass. 2 Conversion efficiency is calculated according to the fraction of interest of the product and might not be comparable between all conditioning processes. 64 3 Opex highly depends on feedstock pick-up, transfer, and transport to final disposal site. 4 Overall attractiveness does not take maturity of the process into account. Source: Kearney Energy Transition Institute Kearney XX/ID Pretreatment technologies mostly have specific outputs; their 1 efficiency and capex heavily impact the value chain attractiveness

View of biomass pretreatment technologies

Enzymatic Anaerobic Mechanical/ Hydrothermal Fast pyrolysis Gasification hydrolysis digestion hexane extraction upgrading

Energy crops, agricultural Forestry residues, Agricultural residues, Agricultural residues, Feedstock applicability residues, forestry MSW, animal waste Energy crops (oily), algae agricultural residues, energy crops energy crops residues energy crops Global Ethanol, butanol, Renewable diesel, jet Methane Renewable diesel, jet production Maturity index rating1 Methane Biodiesel dynamics methanol fuel, gasoline Ethanol fuel, gasoline

Main biofuel generated Mature Pilot/demonstration Mature Mature Pilot/demonstration Pilot

Conversion efficiency2 High Low Medium Medium Medium High

Capex 70% 60–80% 30–60% 95% 90% 60–90% Production Feedstock Maintenance Feedstock CO Raw material economics Maintenance 2 Fuel Opex drivers3 Energy use Feedstock Energy use Operation Energy use Water treatment Enzymes Labor Energy use Labor Waste disposal

Overall attractiveness4

Pretreatment – Results 1 Maturity of the process is given for its specific application to biomass. 2 Conversion efficiency is calculated according to the fraction of interest of the product and might not be comparable between all pretreatment processes. 65 3 Opex highly depends on feedstock pick-up, transfer, and transport to final disposal site. 4 Overall attractiveness does not take maturity of the process into account. Source: Kearney Energy Transition Institute Kearney XX/ID Conversion Advanced biofuels and conversion technologies compatibility processes are often selective toward a type of Processing methods biofuel: biogas, Conversion liquid hydro- Fermentation Syngas Fischer- Trans- Hydro- Anaerobic fermentation Tropsch esterification treatment/ digestion1 carbons, or refining/ alcohols cracking 1 2 3 4 5 3

2 Biomethanol

Bioethanol

Biobutanol Conversion processes are Biogasoline

often derived from the Liquid Liquid petroleum industry and Biodiesel adapted to biomass. Biofuels Renewable diesel

Bio jet fuels

Biomethane

Gas Biogas Conversion technologies – results X Detailed Applicable Optimal biofuel x conversion technology combination

1 Pretreatment process but it gives biofuel of interest. 66 Sources: European Biofuels Technology Platform; Kearney Energy Transition Institute

Kearney XX/ID Conversion technologies are strongly linked with the pretreatment step but 2 also impact the value chain economics with their efficiency and capex

View of biomass conversion technologies

Hydrotreatment Syngas Trans- Fermentation Fischer-Tropsch Incineration and refining fermentation esterification

Based on sugar Ligno-cellulosic, wood MSW, energy crops, Ligno-cellulosic, wood Feedstock applicability Oily energy crops, algae All extracted from biomass residues… manure residues…

Global Renewable diesel, jet Renewable diesel, jet Ethanol None production Maturity index rating1 Ethanol, butanol Biodiesel fuel, gasoline fuel, gasoline Methane (only heat/power) dynamics

Main biofuel generated Mature Mature Mature Pilot Mature Mature

Conversion efficiency2 High Medium Low High/medium High/medium Medium

Capex 50% 50% 45% 57% 90% 17–30% Production Raw material Feedstock Raw materials economics Purification Microbial catalyst Opex drivers3 Labor Utilities Utilities Maintenance catalysts Purification Utilities Chemicals Chemicals

Overall attractiveness4

Conversion technologies - results 1 Maturity of the process is given for its specific application to biomass. 67 2 Conversion efficiency is calculated according to the fraction of interest of the product and might not be comparable between all conversion processes. 3 Opex highly depends on feedstock pick-up, transfer, and transport to final disposal site. 4 Overall attractiveness does not take maturity of the process into account. Source: Kearney Energy Transition Institute Kearney XX/ID For each biofuel Possible biofuels produced through biomass conversion processes the possible processing routes and associated Definition Conversion Pretreatment Feedstock compatibility Syngas fermentation Gasification Methanol (chemical formula CH OH) produced from Anaerobic digestion feedstocks are Biomethanol 3 Methane reforming biomass sources Syngas fermentation listed and Fermentation Enzymatic hydrolysis

Ethanol (chemical formula C2H5OH) produced from Fermentation Enzymatic hydrolysis compared Bioethanol biomass sources, which is mainly used blended with gasoline in gasoline engines Syngas fermentation Gasification Butanol (chemical formula C H OH) produced from 4 9 Fermentation Enzymatic hydrolysis Biobutanol biomass sources, mainly used to produce chemicals Hydrothermal liquefaction Hydrotreatment Hydrocarbon with a similar chemical composition to Fast pyrolysis 2 Biogasoline fossil gasoline produced from biomass sources and studied as an alternative to gasoline Hydrothermal liquefaction Fischer-Tropsch Fast pyrolysis Liquid biofuels sourced from biomass suitable to be Biodiesel blended with fossil-fuel diesel Transesterification Mechanical/hexane extraction Hydrothermal liquefaction Hydrotreatment Renewable Hydrocarbon with a similar chemical composition to Fast pyrolysis A more detailed description fossil diesel which can be used without blending diesel limits in diesel engines Hydrothermal liquefaction and assessment of these Fischer-Tropsch Fast pyrolysis biofuels is conducted Hydrothermal liquefaction alongside solid biofuels in Hydrotreatment Fast pyrolysis the section II.1 of this report Mechanical/hexane extraction Liquid biofuels sourced from biomass suitable to be Bio jet fuels blended with fossil-fuel diesel Hydrothermal liquefaction Fischer-Tropsch Fast pyrolysis Mechanical/hexane extraction Fermented sugars Enzymatic hydrolysis Anaerobic digestion Biomethane Methane (chemical formula CH4) obtained from biomass sources Syngas fermentation Gasification Processing methods – Gas obtained either through the combustion or Biogas decomposition of waste through a thermal or a Anaerobic digestion conclusion chemical process Preferred pathways/feedstock Second best pathways Other possible pathways Non-applicable or compatible feedstock 68 Source: Kearney Energy Transition Institute

Kearney XX/ID Section 2

Biofuels market opportunities and enablers

69

Kearney XX/ID Introduction I. Biomass-to-energy value chain 1. Feedstock overview 2. Processing methods overview i. Conditioning technologies ii. Pretreatment technologies iii. Intermediate products iv. Conversion technologies II. Biofuels market opportunities and enablers 1. Attractiveness and maturity i. Product assessment—technical diagnosis ii. Competitive advantage assessment—economic diagnosis 2. Market drivers and corresponding enablers III.Conclusion: successful business models Appendix 70

Kearney XX/ID What is the best biofuel x market segment combination? i. What are the technical and environmental characteristics of biofuels? ii. What are the competitive advantages vs. fossil fuels or other Key questions renewable energy sources? iii. Which markets are the most promising?

71 Sources: Kearney Energy Transition Institute Historically, History of selected biomass-to-energy value chain products interest for biofuels started First sales of after the oil Use of black liquor pellet-based First biodigester as energy source heating shocks in the built in India in pulp mills appliances 1970s

First commercial- scale waste-to- First retail energy plant in sales of algae- the US based biofuels

Non-exhaustive 125 000 B.C. 1826 1859 1930s 1937 1970s 1975 1985 2011 2012 2018

Start of commercial- Solid biofuels are First tests to First all-biofuel scale bioethanol used since the elaborate commercial sea production in the US control of fire biodiesel voyage and Brazil

Approval for First automobile commercial use of built is fueled biofuels in the with ethanol aviation sector

Biofuels opportunities – introduction Solid biofuels Liquid biofuels Gaseous biofuels

72 Source: Kearney Energy Transition Institute

Kearney XX/ID Some promising Technology maturity curve for bioenergy products biofuels are still in early stage or deployment phase Biomethanol Renewable diesel

Biomethane

Biobutanol Gas from waste Bio jet fuel Wood pellets

Wood chips Biogasoline Biodiesel Bioethanol

Charcoal Capital requirement x technology technology xrequirement Capital risk

Lab Bench Pilot Large- and commercial-scale Widely deployed work scale scale projects with ongoing optimization commercial-scale projects

Research Development Demonstration Deployment Mature technology

Maturity Level Biofuels opportunities – introduction Solid biofuels Liquid biofuels Gaseous biofuels

73 Sources: Advanced Biofuel Feedstocks – An Assessment of Sustainability (ARUP); Kearney Energy Transition Institute

Kearney XX/ID Twelve biofuels— Wood chips Biomethanol Renewable diesel Biodiesel solid, liquid, and Small- to medium-sized Methanol (chemical Hydrocarbon with a similar Liquid biofuels sourced pieces of wood formed by formula CH3OH) produced chemical composition to from biomass suitable to gaseous—are cutting or chipping larger from biomass sources fossil diesel which can be be blended with fossil-fuel pieces of wood used without blending diesel studied in the limits factbook

Solid pellets Bioethanol Bio gasoline Biomethane

Solid biofuels made from Ethanol (chemical formula Hydrocarbon with a similar Methane (chemical compressed organic C2H5OH) produced from chemical composition to formula CH4) obtained matter or biomass biomass sources, mainly fossil gasoline from biomass sources used blended with gasoline

Solid biofuel (traditional) Charcoal Biobutanol and Bio jet fuels Biogas Liquid biofuel (advanced) higher alcohols Gaseous biofuel (advanced) Dark or black porous Butanol (chemical formula Liquid biofuels sourced Gas obtained either carbon prepared from C4H9OH) produced from from biomass suitable to through the combustion or vegetable or animal biomass sources, mainly be blended with fossil-jet decomposition of waste Biofuels opportunities – scope substances used to produce chemicals fuel of analysis

74 Source: Kearney Energy Transition Institute

Kearney XX/ID To assess Biofuels applications opportunity assessment methodology biofuels’ attractiveness, the most performant Biofuel performance assessment biofuels are – Biofuels applications are assessed based on their current intrinsic characteristics vs. fossil fuels and other renewable competitors – Maturity level (in other words, room for efficiency increased) of each application will be used as a proxy to put the product performance selected, and their rates in a dynamic perspective competitive 1 Criteria – A fact card with technical details and corresponding rate is produced for each relevant biofuel advantage is evaluated in the 1 1 Ranking of biofuels and selection of the most promising relevant market Output

Competitive advantage assessment – Biofuels applications are assessed based on their current positioning on the different markets vs. fossil fuels and other renewable competitors – Maturity level (in other words, room for market share increase) of each application will be used as a proxy to put the competitive advantage rates in a dynamic perspective

Criteria 2 Criteria – A fact card with economic details and corresponding rate is produced for each relevant market segment

2 2 Market potential assessment and selection of the top segment to target Output Output

Biofuels opportunities – Biofuel x market segment optimal

assessment methodology Final Final

result combination

75 Source: Kearney Energy Transition Institute

Kearney XX/ID Introduction I. Biomass-to-energy value chain 1. Feedstock overview 2. Processing methods overview i. Conditioning technologies ii. Pretreatment technologies iii. Intermediate products iv. Conversion technologies II. Biofuels market opportunities and enablers 1. Attractiveness and maturity i. Product assessment—technical diagnosis ii. Competitive advantage assessment—economic diagnosis 2. Market drivers and corresponding enablers III.Conclusion: successful business models Appendix 76

Kearney XX/ID Liquid and Biomass-to-bioenergy: final outputs and corresponding industry of application gaseous biofuels are the most promising Bioenergy bioproducts with a Energy Transport Industry Buildings

wide applicability

CHP

Heat

Cars

Other Other

paper

Power Trucks

Heating

Aviation

Pulp and Pulp Shipping

1 Wood chips

2 Solid pellets Solid 1 3 Charcoal

4 Biomethanol

5 Bioethanol

Numbers 7 and 9–11 are 6 Biobutanol and higher alcohols fully described in slides 79–

82 and 1–6 and 8 are fully 7 Biogasoline Biofuels described in the Appendix. Liquid 8 Biodiesel

9 Renewable diesel

10 Bio jet fuels

11 Biomethane

Biofuel performance 12 Biogas assessment – results Gaseous X Deep-dived Applicable High product performance

77 Source: Kearney Energy Transition Institute

Kearney XX/ID Technical attractiveness is strongly linked to energy performance, GHG 1 emission weighted by maturity stage

Comparative view of selected biofuels Not exhaustive

Biogasoline Biodiesel Renewable diesel Bio jet fuels Biomethane Biogas

Animal waste, Animal waste, municipal Animal waste, Animal waste, Feedstock Agricultural residues, Animal waste, forestry agricultural residues, solid waste, algae, agricultural residues, agricultural residues, applicability algae, energy crops residues, energy crops forestry residues, energy crops algae municipal solid waste Processing municipal solid waste methods Anaerobic digestion Optimal pathway Hydrotreatment Transesterification Hydrotreatment Hydrotreatment (HEFA) Syngas fermentation Syngas fermentation

Energetic performance

Applicability

Infrastructure adaptability Technical diagnosis GHG emissions1 3-50 25–60 38–58 5–37.5 5–15 18 gCO2eq/MJ

Maturity index rating Research Mature Deployment Development Deployment Deployment

Technical attractiveness

Biofuel performance assessment – results 1Theoretical negative GHG emissions values were observed for some biofuels co-producing electricity and were not taken into account here 78 Source: Kearney Energy Transition Institute, Advanced Biofuels – GHG Emissions and energy balance, IEA 2013

Kearney XX/ID Biogasoline is Industry environment Physico-chemical Economic Definition: characteristics characteristics chemically similar to – Biogasoline is a fuel which is chemically similar to fossil-fuel gasoline but gasoline and thus produced from a biomass feedstock. Biogasoline Biogasoline Contrary to bioethanol, which is an – $300–$2,600 for algae- could play a key alcohol, it is composed of a mixture of LHV (MJ/l) 34.2 based biogasoline per barrel hydrocarbons containing between 6 and Price (compared to $100 for fossil role in energy 12 carbon atoms Kinematic fuel gasoline) – viscosity at 40°C 0.55–0.593 transition with C H (mm2/s) – Very early stage technology, 8 18 Market size no dedicated market yet higher maturity Octane, represented here, is one of the Density (kg/m3) 737 main components of gasoline Competing – Existing biofuels, fossil Oxygen (%) 0–4 technologies gasoline, electric batteries Main feedstocks: – Too early-stage to benefit Policy – Energy crops: sugar beet, sugarcane Sulfur (%) 0.008–0.048 from dedicated policy Biogasoline drivers/ – Agricultural residues: wheat, corn stalks support, apart from R&D 7 – Algae barriers Flash point (°C) -65–-43 grants Applications: Future – No forecasts available, will – Transport sector: cover the same range Octane number 86–94 growth and depend on the technology of applications as traditional gasoline, Values in the table above are the ones for development improvements realized in especially in light-duty vehicles. gasoline, but are analogous to the ones for perspectives the years to come Biogasoline can be used alone or blended biogasoline due to similar chemical composition Feedstock compatibility with fossil fuel gasoline.

Preferred processing method Pros and cons Technical competitiveness Hydrotreatment Renew- Other Pros Cons Fossil fuel able bioenergy Bio – Can be used in an internal – Very high production cost Electric gasoline Preferred market segment Gasoline Bioethanol combustion engine without compared to fossil gasoline batteries Light-duty vehicles any modification and to other biofuels Rate Energy High – Early-stage technology not performance1 (MJ/l) totally technically viable yet Technical maturity Applicability High

1 MJ of mechanical power (taking into account engine efficiency in the case of liquid fuels) divided by liter Adaptability High Low Average High of fuel. For electric cars, the mechanical energy obtained after engine conversion is divided by the volume GHG emissions of the battery. 87 02 18–80 3-50 Avg. Biogasoline – deep-dive 2 Road emissions of electric vehicles does not take into account the emissions relative to the power generation. (gCO2/MJ) Sources: Biogasoline: An out-of-the-box solution to the food-for-fuel and land-use competitions, Macroalgae- 79 Derived Biofuel: A Review of Methods of Energy Extraction from Seaweed Biomass, Energetica Futura; Kearney Energy Transition Institute

Kearney XX/ID Renewable diesel Industry environment Physico-chemical Economic Definition: characteristics characteristics has higher potential – Renewable diesel is a biomass-derived Renewable transport fuel that is chemically similar to Diesel Renewable diesel vs. biodiesel since it petroleum diesel (hydrocarbon) and is diesel – $2.75–$3.75 per gallon in suitable for use in conventional diesel LHV (MJ/l) 34.4 36.09–38.60 Price is chemically similar engines. Therefore, it is distinct from California at the pump in 2018 Kinematic viscosity biodiesels which are methyl esters. 1.3–4.1 1.3–4.1 – 4.8 million tons per year in to diesel, but it is (mm2/s) 2019 Market size – 680 million gallons (equal to not competitive yet From C10H22 to C15H32 Density (kg/m3) 780 710 2 million tons) for the largest producer (Neste) Sulfur (%) 0–15 0–15 Competing Main feedstocks: – Biodiesel, fossil fuel diesel Technologies – Animal waste and fats, agricultural residues Boiling point (°C) 180–340 180–340 and by-products (palm oil, palm fatty acid – Specifications: ASTM D975 in distillate, cooking oil residues), algae Flash point (°C) 60–80 60–80 the United States and EN 590 in Europe Policy – Supportive policies: Renewable diesel Applications: drivers/ Cloud point (°C) -35–5 -35–5 Renewable Fuel Standard in 9 – Transport sector: notably heavy-duty barriers the US, Renewable Energy vehicles, shipping, and aviation Pour point (°C) -35 – -15 -35 – -15 Directive in the EU, blending – Main markets: United States, especially mandates in several countries California which set ambitious targets to Cetane number 40–55 40–55 Future growth replace fossil fuels with renewables in the and – 19.7 million tons per year by following decade (up to one billion gallons of LCA GHG development 2030 (13% expected CAGR) 28–54 89 renewable diesel expected per year by emissions (g/MJ) perspectives Feedstock compatibility 2030)

Preferred processing method Pros and cons Technical competitiveness Hydrotreatment Renew- Other bio- Pros Cons Fossil fuel able energy Renewab – No blending limits in existing – Further research is required to Electric le diesel Preferred market segment diesel engines and vehicles fully characterize the effects of Diesel Biodiesel batteries Heavy-duty vehicles – Can be produced in the same renewable diesel on engines Rate facilities as conventional diesel – Slightly lower energy content Energy High – 40–68% lower GHG emissions compared to conventional diesel performance1 (MJ/l) Technical maturity than conventional diesel fuel – Not competitive with conventional Applicability High diesel fuel without incentives Low Average High 1 MJ of mechanical power (taking into account engine efficiency in the case of liquid fuels) divided by liter Adaptability High of fuel. For electric cars, the mechanical energy obtained after engine conversion is divided by the volume GHG emissions of the battery. 89 02 18–80 38–58 Avg. Renewable diesel – deep-dive 2 Road emissions of electric vehicles does not take into account the emissions relative to the power generation. (gCO2/MJ) Sources: USDOE Alternative Fuels Data Centre and Alternative fuel price report 2020, Emerging Markets 80 Renewable Diesel 2030, GNA Consultants, NESTE Renewable Diesel handbook; Kearney Energy Transition Institute

Kearney XX/ID Bio jet fuels are Industry environment Physico-chemical Economic characteristics characteristics the most promising Definition: – Biomass-derived jet (bio jet) fuels are Bio jet fuel Bio jet fuel way to decarbonize liquid biofuels suitable to be blended – 0.7–1.6 $/L (HEFA) with or replace jet kerosene from fossil LHV (MJ/l) > 34.2 – 1–2.5 $/L (other methods) aviation, but are not Price origin – (0.3–0.6 $/L for fossil-jet kerosene) competitive yet and Sulfur (%) < 0.3 From C H to C H – 15 million L in 2018 (less than 10 22 14 30 Market size 0.1% of jet fuel consumption) lack policy support Flash point (°C) 38 Main feedstocks: – Fossil-based jet fuels Competing – (Very) long term: electric or – Animal waste, forestry residues, and Density (kg/m3) 775–840 energy crops: most bio jet fuels are technologies solar-powered aircrafts, produced through the upgrade of cryogenic hydrogen aircrafts Freezing point (°C) - 40 vegetable oils and fats – Voluntary targets from airlines – Various other feedstock (algae oil, and aircraft manufacturers Bio jet fuels lignocellulose biomass) can be used LCA GHG 50% to 95% savings Policy – CORSIA carbon credit scheme 10 emissions compared with fossil drivers/ from 2021 onward but their conversion pathways to bio jet (kgCO2/MWh) jet fuels fuels are not competitive yet barriers – Increase of bio jet green certificate schemes (RFS2 in Applications: Five biomass to bio jet fuel pathways are the US, RTFO in the UK...) certified for blending with kerosene. But – Main usage: blended with jet kerosene among these, only HEFA is technically Future growth – 5 billion liters produced in 2025 (up to 50% according to ASTM mature and commercialized. and (18% CAGR 2018–2025) certifications) development – Up to 530 billion L required by Feedstock compatibility perspectives 2050 to meet GHG targets

Preferred processing method Pros and cons Technical competitiveness Hydrotreatment (HEFA) Renew- Other Pros Cons Fossil fuel able bioenergy Bio jet – Jet engines do not require – Not economically competitive with fuel Preferred market segment modifications for the use of bio jet fossil bio jet fuels Kerosene None None

Aviation fuels – Only 5 airports with regular biofuel Rate – Lack of other reliable means to supply (Bergen, Brisbane, Los Energy content NA NA High decarbonize the aviation sector Angeles, Oslo, and Stockholm) (MJ/L) Technical maturity – Higher quality requirements and costs compared to road transport Applicability NA NA High biofuels Adaptability NA NA High Low Average High – Policy support made difficult by the GHG emissions international nature of air travel 70 NA NA 5–37.5 High Bio jet fuels – deep-dive (gCO2/MJ) Sources: National Renewable Energy Laboratory, Review of Biojet Fuel Conversion Technologies, 81 IEA Are aviation biofuels ready for take off?, IEA Renewables 2018 Report; Kearney Energy Transition Institute

Kearney XX/ID Biomethane is a Industry environment Physico-chemical Economic Definition: characteristics characteristics promising – Biomethane (or “renewable natural gas”) is near-pure methane produced either by Biomethane Biomethane alternative to removing CO2 and other impurities from biogas or through the gasification and methanation of – $65/MWh (excluding grid decarbonize heat solid biomass LHV (MJ/m3) 35.6–36 injection) Price – $0.45–0.55/LGE for waste- based biomethane for vehicles and power supply CH4 – World production biogas + Fusion point (°C) -182.47°C Market size potentially at a Main feedstocks: biomethane: 35Mtoe – Agricultural residues: residues from harvests of lower cost than wheat, sugar beet, sugarcane, maize… Competing – Liquid biofuels, renewable – Animal manure: Waste from livestock including Boiling point (°C) -161.52°C technologies energy, fossil natural gas natural gas cattle, pigs, poultry, and sheep – Germany, Italy, the – Waste: municipal solid waste, wastewater Density (gaseous, Netherlands, and the United sludge, industrial waste from the food- 15°C, 101,3 kPa) 0.6709.10-3 Policy drivers/ Kingdom introduced support processing industry (g/cm3) barriers for biomethane in transport Biomethane – Forestry residues: residues from forest – Support for household-scale 11 Auto-ignition point digesters in China management and wood processing 537 (°C) – Sustainable feedstocks set to Applications: Future growth grow by 40% by 2040 LCA GHG – Main usage: Residential: fuel used for heating 5–15 and – 75–200 Mtoe expected by emissions and cooking or to generate power (up to 371) development 2040 (2/3 in Asia Pacific) – Other uses: Transport: compressed or liquefied, (gCO2/MJ) perspectives – 2–10 billion investment per especially for heavy-duty vehicles and shipping year between 2020 and 2030 Feedstock compatibility – Main markets: Europe, North America

Preferred processing method Pros and cons Technical competitiveness Anaerobic digestion Renew- Other Pros Cons Fossil fuel Syngas fermentation able bioenergy – Potential to sustainably produce 30 – Today, most of the biomethane is Bio- Solar Preferred market segment Mtoe of biomethane at a lower price more expensive than the Natural Wood methane photo- than natural gas prevailing natural gas prices in gas products Grid injection voltaic Heavy-duty vehicles, Shipping – Fully compatible with existing different regions, with the Rate infrastructures exception of some landfill gas Energy content NA2 NA3 High – Not subject to blend share obligations (MJ/m3) Technical maturity – Can be used on demand to produce power and in remote areas needing Applicability High decentralized sources of energy Low Average High Adaptability High 1 134 without land use and land use change (LULUC) and 24 with LULUC (avoided agricultural emissions linked to the GHG emissions 70–77 0 5–20 5–15 High decrease of fertilizers) (gCO2/MJ) Biomethane – deep-dive 2 No energy performance provided for solar photovoltaics, as the performance is provided in power per square meter of solar panel. 3 Energy performance of wood products is not disclosed here as they are solid products which makes the comparison with gases not relevant. 82 Sources: IEA Outlook for biogas and biomethane, Carbone 4 Biomethane and Climate; Kearney Energy Transition Institute

Kearney XX/ID Introduction I. Biomass-to-energy value chain 1. Feedstock overview 2. Processing methods overview i. Conditioning technologies ii. Pretreatment technologies iii. Intermediate products iv. Conversion technologies II. Biofuels market opportunities and enablers 1. Attractiveness and maturity i. Product assessment—technical diagnosis ii. Competitive advantage assessment—economic diagnosis 2. Market drivers and corresponding enablers III.Conclusion: successful business models Appendix 83

Kearney XX/ID Primary energy Transport Energy (heat and power) demand for biomass can be Transport energy use gathers fuels and Energy sector use accounts for fuel use in split in four electricity used in the transport of goods or electricity plants, heat plants, and combined persons within the national territories and for heat and power (CHP) plants. It accounts for the sectors: transport, international transport. It includes fuels and primary fuel used to produce energy and does energy generation, electricity delivered to light- and heavy-duty not look at the secondary energy produced by industry, and vehicles, as well as the ones used in the the plants. Both main activity producer plants aviation and shipping sectors. and small plants that produce fuel for their own buildings use (auto-producers) are included.

Primary energy refers to the Industry Buildings energy contained in a fuel “as input” and must be distinguished from energy Industry sector energy use includes fuel used The buildings sector includes energy used in resulting from the conversion within the manufacturing and construction residential, commercial and institutional of the raw fuel “as output” in industries. Key industry branches include iron buildings, and non-specified other buildings. In order to avoid double and steel, chemical and petrochemical, cement, buildings, energy is used for space heating and counting (for example, and pulp and paper. Use by industries for the cooling, water heating, lighting, and in electricity and heat produced in power plants). transformation of energy into another form or for appliances and cooking equipment. Competitive advantage the production of fuels is excluded. assessment – scope of analysis

84 Sources: World Energy Outlook (2019); Kearney Energy Transition Institute

Kearney XX/ID In OECD countries, Bioenergy consumption by sector and fuel type more than half of the Mtoe, 2017, OECD countries bioenergy generated 109 comes from solid 1% sources, except in 17% the transport sector

77 1% 1% 32% 11% 62 1% 1%

50

This assessment is only 87% performed for OECD 99% countries because there is 50% no data available at world 100% level. As these countries are the ones where “advanced biofuels” are the most developed, the reliance on solid biofuels is even more Energy Transport Industry Buildings significant at global level. Competitive advantage assessment – introduction Solid biofuels Energy from waste Gaseous biofuels Liquid biofuels

Note: Percentages may not resolve due to rounding. 85 Sources: IEA Renewables Information 2019 Database, World Energy Outlook 2019 (IEA); Kearney Energy Transition Institute

Kearney XX/ID Economic attractiveness is strongly linked to policy support and forecasted growth in the preferred market segment

Comparative view of selected biofuels Not exhaustive

Biogasoline Biodiesel Renewable diesel Bio jet fuels Biomethane Biogas

Animal waste, municipal Animal waste, Animal waste, Animal waste, Feedstock Agricultural residues, Animal waste, forestry solid waste, algae, agricultural residues, agricultural residues, agricultural residues, applicability algae, energy crops residues, energy crops Processing energy crops algae forestry residues municipal solid waste methods Anaerobic digestion Anaerobic digestion Optimal pathway Hydrotreatment Transesterification Hydrotreatment Hydrotreatment (HEFA) Syngas fermentation Syngas fermentation

Technical attractiveness Technical diagnosis Maturity index rating Research Mature Deployment Development Deployment Deployment

Price

Policy support

Production Preferred market Cars Cars/trucks Trucks/shipping Aviation Heat and power Heat and power economics segment

Forecasted growth in preferred market

Economic attractiveness Competitive advantage assessment – results 86 Source: Kearney: Energy Transition Institute

Kearney XX/ID Promising sectors Biomass-to-bioenergy: promising sectors regulation, dependencies and potential

potential depends Bioenergy on regulation and Energy Transport dependencies Power Trucks Aviation Shipping – 2017: 150 countries had – Transition toward more – A detailed analysis of aviation – Two main regulations in place: the renewable power targets and efficient trucks, driven by fuel policies is presented in slide 97 Energy Efficiency Design Index 125 implemented dedicated economy standards, specific (efficiency standard for new ships) and policies and regulations (e.g. weight and speed limits, the Ship Energy Efficiency quotas and obligations, feed-in grants, tax breaks, and other Management Plan tariffs, auction mechanisms, fiscal measures aimed at – Establishment of Emission Control financial and fiscal instruments) reducing fossil fuels and Areas in 2020 with limited SOX and – Reductions of government promoting biofuels and EV PM emissions near ports and support for fossil fuels are – Blending limits less of a reduction of fuel sulfur content witnessed in OECD and BRICS concern for biofuels because (from 3.5% to 0.5%) provides an countries growth is mainly forecasted advantage to biofuels – Among renewables, solar PV in developing countries with – The International Maritime Regulation and wind benefit from the most low biofuel penetration for Organization agreed to reduce GHG developed policy frameworks now emissions by at least 50% by 2050 – Biomethane lacks specific – Lack of policies specifically compared with a 2008 baseline policy support in developing dedicated to the trucks – Limited support for other renewables countries segment supporting because of moderate technical renewables uptake potential in the sector – Power derived from coal-fueled – Biofuels and oil vehicles have – Policy support for renewable – Compared to road transport and power plants can be converted more room to compete on made difficult by the aviation, the shipping sector uses to biomass-fueled plants (for long-distance routes, as international nature of air travel much less refined or processed fuel example, Drax UK), which trucks have a high energy – Energy density of batteries and types indicates a successful consumption, and as pure hydrogen too low – Development of hydrogen- and alternative as countries move performance of EV and compared to liquid fuels in the ammonia-based fuels is hindered by

potential toward retiring coal hydrogen trucks and refueling context of aviation where weight the lack of refueling infrastructure – Biomass is a suitable infrastructures availability reduction plays a key role – Electrification is challenging for resource for combined heat requires improvement – Hydrogen needs for cryogenic long-distance routes because the

and and power plants, as their storage requires changes in range of batteries is too restrictive combustion to produce power – Electric and hydrogen trucks aircraft design and new refueling – The lower sulfur emissions from also releases heat get an advantage in cities and and storage infrastructure biofuels is likely to boost their market – Deployment of biomass for short routes because of making its adaptability more penetration in regard to the recent solutions for power generation lower emissions than difficult policy evolutions are increasingly viewed as biofuels and noise – Air transport efficiency supportive to more efficient reduction improvements of 2% per year Competitive advantage renewable technologies (for forecasted until 2050 should assessment – results example, wind and solar) reduce energy consumption and Dependencies because they can be used on slow the increase in energy demand demand 87 Source: Kearney Energy Transition Institute Impact on attractiveness of value chain Negative Positive

Kearney XX/ID Overall, energy World bioenergy consumption by sector and transport are Mtoe, 2018–2040, world1 – stated policies scenario the top two contributors to Energy Transport Indust Buildings ry bioenergy growth 38 66 1,681 92 2% 1% forecast until 2040 9 26 5% 58 6% 6 41 3% 226 1,251 2% 5% 24% 3% +232 +134 -28 14% (53%) (+32%) +92 (-6%) (21%) 17% 1 2 18% Bioenergy growth will be supported by the power sector (~50% total demand increase) but the highest 49% 33% growth rates are in transport +3.9% +0.6% +2.2% +6.4% +12% +22% +1.8% +1.2% -0.5% (+22% per year in aviation and +12% in shipping) 52% 1% 10% 14% 2% 6% 21% 9% -15% 10% 10% 2018 Power Heat Car Truck Shipping Aviation Industry Space Other 2040 heating residential X Detailed Competitive advantage Space Other residential Industry Power Heat Car Truck Ship AviationX% Contribution to bioenergy growth X% CAGR assessment – results heating 1 Excluding “Other” which gathers the energy used for transformation activities (for example, energy industry own use) as well as the final energy used in sectors other than industry, transport, and buildings (~8% of total bioenergy consumption in 2018) Note: Percentages may not resolve due to rounding. 88 Sources: World Energy Outlook 2019 (IEA); Kearney Energy Transition Institute

Kearney XX/ID Bioenergies will Energy sector: energy consumption forecast by subsectors Mtoe, 2018–2040, world – stated policies scenario contribute to the +232 Mtoe cumulative growth for decarbonization biomass in energy industries +30% and electrification 11 6 226 of the energy 343 7,155 sector 3% 909

163 197 1 Energy 489 5,495 +3.9% +0.6% 97% Heat1 10% +7.4% +7.4% +1.7% +0.0% 90% +1.1% +0.2% Power1 +0.6% -4.7% 90% 10%

2018 Power1 Heat1 2040 Biomass is a promising fuel for CHP plants as their combustion to produce power also releases useful heat. Competitive advantage assessment – energy Fossil fuels Nuclear Hydro Wind, solar, and other renewables Biofuels and waste X% Contribution to biofuels growth X% CAGR 2018–2040 1 The output of combined heat and power plants (CHP) has been split between heat and power respectively, with respect to average heat to power ratio of CHP plants for 2017 obtained from IEA World Energy Balances. Sources: World Energy Outlook 2019 (IEA), Market Report Series: Renewables 2018 (IEA), Are aviation biofuels ready for take off? (IEA), Tracking Transport, International shipping (IEA); Kearney Energy 89 Transition Institute

Kearney XX/ID About 50% of total Industry environment Bioenergy economic competitiveness

bioenergy growth by Other – Between 2019 and 2040, electricity demand is Fossil fuel Bioenergy 2040 will come from expected to grow twice as fast as total primary renewable energy demand Gas

Natural Wind Bio- 1 Coal from the power segment gas onshore methane – Power demand growth is mainly expected in waste developing countries, as efficiency improvements Rate since storage CAGR 0.23% 1.74% 8.36% 3% 20% High provides competitive are witnessed in developed countries (2019–2030) Current – Electricity supply is expected to shift toward low- 56 65 LCOE 50–120 50–95 10–60 Avg. (45–100) (15–100)

advantage vs. other carbon sources ($/MWh) Macro trends Macro must-run renewables – In addition to cogeneration plants using solid Forecasted LCOE 2040 55–145 60–115 50–85 7–50 12–80 Avg biomass feedstocks, a growing part of the power ($/MWh) produced through biomass is expected to come Policy from energy from waste and biogas plants High 1 Energy support Other High enablers

Impact on attractiveness of value chain Negative Positive 1 Rating of the best biomass alternative, here biomethane

2018 2040

Fuel market 4,935 6,920 Power energy consumption forecast by fuel type +225 Mtoe, or about 97% of size (Mtoe) Mtoe, 2018-2040, world - stated scenario biomass growth in the energy sector +40% Biofuels 3% 6% share (%) 6,920 226 909 6% 4,935 163 17% 489 197 8% Economic maturity 5% 7% 13% 14% 3% 0.6% 1.1% 1.7% 7.4% 3.9% 57% Low Medium High 70% 25% 10% 8% 46% 11% 2018 Fossil fuels Nuclear Hydro Other renewables Bioenergy 2040 Energy – deep-dive X% Contribution to sector growth X% CAGR 2018–2040

Sources: World Energy Outlook 2019 (IEA), Renewable Energy Policies in a Time of Transition (IRENA), Energy Technology Perspectives (IEA), Outlook for biogas and biomethane (IEA); Kearney Energy 90 Transition Institute

Kearney XX/ID In transport, trucks Transport: energy consumption forecast by subsectors Mtoe, 2018–2040, world – stated policies scenario will contribute to 43% +134 Mtoe cumulative growth for of biofuels growth biomass in transport industries but new applications +26% 3,605 in the aviation and 24 211 54 7% 5 29 shipping sectors 26 45 9 2% 240 19 185 40 8% offer longer-term 2,865 61 58 2 22 Others1 179 4% 41 69 potentials Rail 2% 49 15% 9% Shipping 2 Transport Aviation 11% 8% Other road 9% vehicles +2.2% +6.4% +0.0% +22.3% +11.6% +0.0% 27% Trucks 26% Biofuels growth perspective +20.1% +16.7% +11.7% +0.0% +0.0% +3.4% is very low for « Other road vehicles » and « Rail » sectors, they show low -0.2% +1.0% -0.4% +2.1% +0.8% -0.8% percentage of contribution to Cars 39% 33% biofuels growth compared to 31% 43% 0% 19% 7% 0% other sectors. 2018 Cars Trucks Other road Aviation Shipping Rail 2040 vehicles

Competitive advantage assessment – transport Biofuels Electricity Oil X% CAGR 2018–2040 X% Contribution to biofuels growth 1 “Others” accounts for the fuels used in the transport sector which are different from oil, electricity, and biofuels (for example, hydrogen, natural gas…) Sources: World Energy Outlook 2019 (IEA), Market Report Series: Renewables 2018 (IEA), Are aviation biofuels ready for take off? (IEA), Tracking Transport, International shipping (IEA); Kearney Energy 91 Transition Institute

Kearney XX/ID Biofuels have high Industry environment Bioenergy economic competitiveness

potential in the – Almost all the increase in road freight fuel demand Other Fossil fuel Bioenergy trucks industry is forecasted to come from emerging and renewable developing countries Renew-

Bio- 1 – Small EV penetration because of technical Diesel H2 Electric able since other diesel constraints (higher energy demand per km diesel compared to LDV) Rate renewable sources 5% CAGR2 – Biodiesel is expected to be the fuel driving the 0.8% 47% 22.3% (2019– 13% Avg. (2019–2030) are limited by growth of the consumption of biofuels in the sector 2024) by 2050 644 9,200 80–240 1,211 930–1,270 technical – Oil demand increase for trucks by 2040 is expected Current price Avg. Macro trends Macro $/tonne $/tonne $/MWh $/tonne $/tonne constraints to be the second-largest of any sector after petrochemicals Forecasted 755 5,000 100–250 1,297 Data Avg. – Good potential for hydrogen uptake as truck fleets price (2030) $/tonne $/tonne $/MWh $/tonne missing can help overcome the low utilization rate of Transport Policy refueling stations Avg. 2 support

Other High enablers

Impact on attractiveness of value chain Negative Positive

2018 2040

Total fuel +58 Mtoe, or about 43% of market size 740 980 Trucks energy consumption forecast by fuel type biomass growth in all transport (Mtoe) Mtoe, 2018–2040, world – stated scenario modes +32% Biofuels 3% 8% share (%) 1.0% 16.7% 6.4% 980 58 2 2 8% Economic maturity 740 179 3% 1% 92% 97% Low Medium High 75% 1% 24%

2018 Oil Electricity Biofuels 2040 Transport – deep-dive X% Contribution to sector growth X% CAGR 2018–2040

1 Rating of the best biomass alternative, here renewable diesel 92 2 CAGR estimated for the entire road market (cars, trucks, and other vehicles) Sources: World Energy Outlook 2019 (IEA), Global EV Outlook (IEA), The Future of Hydrogen (IEA), The Future of Trucks (IEA); Kearney Energy Transition Institute

Kearney XX/ID Biofuels are the Industry environment Bioenergy economic competitiveness

only reliable Other – Demand will increase by 3.8% annually and reach Fossil fuel Bioenergy 17 trillion passenger kilometers by 2040, more than renewable renewable triple that in 2010

Jet Power to 1 alternative for Electric Bio jet fuel – Aviation emissions are forecasted to increase by kerosene liquid aviation, whose 70% by 2050 compared to 2020 levels and to Rate CAGR Data account for 4.5% of all CO2 emissions by this date +2.1% NA +22.5% High (2018–2040) missing

energy demand is trends Macro – Alternative solutions to decarbonize aviation remain 0.5 1.8–2.7 0.7–1.6 Current price NA Avg. expected to grow by at an early stage of development $/L $/L $/L

65% by 2040 Forecasted 0.6 Data Data NA Avg. price (2030) $/L missing missing2

Transport Policy High 2 support

Other Avg. enablers

Impact on attractiveness of value chain Negative Positive

2018 2040

Total fuel +26 Mtoe, or about 20% of market size 325 535 Aviation energy consumption forecast by fuel type biomass growth in all transport (Mtoe) Mtoe, 2018–2040, world – stated scenario modes +65% Biofuels 0.1% 5% 2.1% 0% 22.3% share (%) 535 0 26 5% Economic maturity 325 185 0.1% 99.9% 95% Low Medium High 88% 0% 12%

2018 Oil Electricity Biofuels 2040 Transport – deep-dive X% Contribution to sector growth X% CAGR 2018–2040 1 Rating of the best biomass alternative, here bio jet fuel 2 Cost reduction through technical learning is limited as the technology is broadly mature. However, costs could be reduced thanks to economies of scale, as for now bio jet fuel is produced on a batch basis. 93 Sources: World Energy Outlook 2019 (IEA), Global EV Outlook (IEA), The Future of Hydrogen (IEA), The Future of Trucks (IEA); Kearney Energy Transition Institute

Kearney XX/ID International, Governments and legal International aviation Private companies’ national, and targets and obligations organization targets voluntary targets corporate The regulatory levers of these bodies International regulations are set by the The cost of fuel accounts for 20% of regulations are are limited because of the international International Civil Aviation Organization, aviation ticket prices and leads airlines dimension of air travel. Some of the a UN agency gathering its 193 member to pursue energy efficiency struggling to main national and regional schemes are states responsible for setting aviation improvements. In addition, airlines can presented below. standards and recommended practices also set voluntary CO2 reduction targets achieve the and policies in the civil aviation sector EU Emissions Trading Scheme: Fuel Consumption Standards: Use of sustainable fuel blends: decarbonization of – Cap and trade system which obliges – Standards ratified by the ICAO limiting – 100,000 flights using bio jet blends companies, notably in the aviation the emissions of new aircraft and achieved in 2017 and 1 million the aviation sector sector, to keep their emissions below obliging to modify them if the targets forecasted for 2020 95% of 2004–2006 historical aviation are not met – More than 10 long-term biofuel offtake emissions – The Standard applies to new aircraft agreements between airlines and Transport – Higher emissions than this threshold models from 2020, and to aircraft producers currently in place, covering 2 must be compensated by purchasing models already in production from over 1.5 billion L of supply and trading CO2 emissions 2023 on allowances National taxes: Carbon Offsetting and Reduction Infrastructure adaptation: – Norway and Japan directly Scheme for International Aviation – Five airports currently have regular bio implemented a tax on jet fuels (CORSIA): jet fuel distribution (Bergen, Brisbane, International policy-making – A larger amount of countries have – Agreed in 2013, the main objective is Los Angeles, Oslo, and Stockholm) appears as the most taxes on tickets based on flight to ensure carbon neutral growth for appropriate level to distance: international aviation from 2020 – UK Air Passenger Duty: settled in – Obligation for airlines to offset their significantly change the 1994, the rate depends on the increase in emissions after 2020 by status quo. distance between a travel’s country purchasing credits from emissions capital and London and the type of mitigation projects outside the aviation aircraft sector – German Air Travel Tax: settled in 2011 for flights departing from Germany, its level depends on the distance between Frankfurt and the largest commercial airport in the destination country – Other countries with similar Transport – deep-dive policies: Sweden, France, Norway, Austria, and South Africa Sources: Renewables 2018 (IEA), IEA Tracking Transport, Energy Efficiency 2018 (IEA), IEA Are aviation biofuels ready for takeoff?, Jörgen Larsson, Anna Elofsson, Thomas Sterner & Jonas Åkerman (2019) 94 International and national climate policies for aviation: a review, Climate Policy; Kearney Energy Transition Institute

Kearney XX/ID Biofuels are the Industry environment Bioenergy economic competitiveness only reliable – The shipping sector accounts for 80% of all goods Fossil fuel Other renewable Bioenergy transported via international shipping routes, using alternative to more than 85,000 vessels Heavy fuel oil Renew-

NH3 or Bio- 1 Marine diesel Electric able decarbonize the H2 diesel – In 2017 shipping accounted for 2-3% of CO2 oil diesel emissions but 4-9% of SOX emissions and 10-15% Rate shipping industry CAGR Data Data +0.8% NA NA Avg. of NOX emissions worldwide (2018–2040) missing missing

Macro trends Macro 0.44– 0.8– – Maritime freight activity is set to grow by around 0.29–0.45 Current price NA NA 0.92 1.15 Avg. 45% and oil demand in the sector is set to rise by $/L 20% by 2030 $/L $/L Forecasted 0.4– 0.3–0.52 Data price NA NA 0.82 Avg. $/L missing (2030, $/L) $/L Transport Policy High 2 support

Other Avg. enablers

Impact on attractiveness of value chain Negative Positive

2018 2040

Total fuel market size 250 305 Shipping energy consumption forecast by fuel type +9 Mtoe, or about 7% of biomass (Mtoe) Mtoe, 2018–2040, world – stated scenario growth in all transport modes +22% Biofuels 0.1% 3% share (%) 305 0 9 3% Economic maturity 250 45 0.1% 97% 99.9% 0.8% 0% 11.6% Low Medium High 83% 0% 17% 2018 Oil Electricity Biofuels 2040 Transport – deep-dive X% Contribution to sector growth X% CAGR 2018–2040

1 Rating of the best biomass alternative, here biodiesel 95 2 Cost reduction through technical learning is limited as the technology is broadly mature. However, costs could be reduced thanks to economies of scale, as for now bio jet fuel is produced on a batch basis. Sources: World Energy Outlook 2019 (IEA), Global EV Outlook (IEA), The Future of Hydrogen (IEA), The Future of Trucks (IEA), Oak Ridge National Laboratory, Understanding the Opportunities of Biofuels for Marine Shipping, IEA Bioenergy Biofuels for the Marine Sector; Kearney Energy Transition Institute Kearney XX/ID Renewable diesel Biofuel x market combination1 for road transports and biogas in Optimal Biofuel Competitive power generation Value chain Sectors Segment biofuel performance advantage Maturity are the best Power generation • Biomethane Combined heat Energy • Biomethane medium-term and power (CHP) opportunities for Heat generation • Biomethane • Renewable Trucks biofuels diesel

Aviation • Bio jet fuel Transport • Renewable Bio- Shipping energy diesel Cars • Biogasoline Paper, pulp, and • Black liquor In the longer term, bio jet printing Industry Wood and wood fuel in aviation and biodiesel • Black liquor in shipping are expected to products play a significant role. Cooking • Biogas Buildings Biomass Space and water • Biogas heating Pharmaceutical • Biomethanol and cosmetics Bio- Chemicals and petro- FMCG • Bioethanol, chemistry chemicals Plasticizers and Biofuel market attractiveness • Higher alcohols and maturity – conclusion maintenance High attractiveness Average attractiveness Low attractiveness

1 The attractiveness of a given biofuel depends on the perspectives of the market segment where it is assessed. This is the reason why the same biofuel can have different attractiveness ratings. 96 Source: Kearney Energy Transition Institute

Kearney XX/ID Market dynamics Advanced biofuels market dynamics show distinct medium- and long-term markets reveal two possible markets shaping the future of advanced Biofuels play a role in the biofuels transport sector (cars Market enablers are and trucks) and have unlocked (regulatory, power and CHP technical, economic) applications

Bio jet fuels are used to decarbonize aviation Illustrative and shipping as there are few competing There are two types of renewable alternatives market segments for Bio jets fuels benefit from advanced biofuels: the “pivot previous technical market” where they are more development and

Biofuels competitive advantage Biofuelscompetitive investments mature with applications in Biofuels’ role for cars and the power and CHP sector trucks is overtaken by competing renewable and as fuel for trucks, and alternatives the “end-game market” (battery, hydrogen) where advanced biofuels will still be early stage by 2040

2020 2030 2040 2050 Time Biofuel market attractiveness and maturity – conclusion Medium term Long term Biofuel competitive advantage in power and truck industries Biofuel competitive advantage in shipping and aviation industries 97 Source: Kearney Energy Transition Institute

Kearney XX/ID Introduction I. Biomass-to-energy value chain 1. Feedstock overview 2. Processing methods overview i. Conditioning technologies ii. Pretreatment technologies iii. Intermediate products iv. Conversion technologies II. Biofuels market opportunities and enablers 1. Attractiveness and maturity i. Product assessment—technical diagnosis ii. Competitive advantage assessment—economic diagnosis 2. Market drivers and corresponding enablers III.Conclusion: successful business models Appendix 98

Kearney XX/ID What are the market conditions that facilitate biomass-to- bioenergy uptake? i. What are biomass-to-bioenergy market drivers? ii. What are the corresponding levers to activate in order to increase Key questions attractiveness?

99 Source: Kearney Energy Transition Institute World biofuel World biofuels demand by fuel type demand is Mtoe, 2017, World, IEA Energy Balances overwhelmingly dominated by Traditional biofuels Advanced biofuels traditional biofuels 1,150

Solid biofuels 100% Nevertheless it has to be weighted with the yield of the device: a Mtoe of traditional biofuel is often burnt in a low efficiency device which 89 makes it less valuable than a Other liquid biofuels 11% 60 Industrial Mtoe of advanced biofuel Biodiesel Municipal solid waste 30 Bioethanol 34% 42% Biogases consumed with a high yield. 55% waste 58% 100% Solid biofuels Liquid biofuels CHP from waste1 Biogases

Market enabler – introduction

1 Combined heat and power 100 Sources: IEA Renewables Database (2019); Kearney Energy Transition Institute

Kearney XX/ID The demand is Bioenergy primary energy demand by continent driven by World, 2017, Mtoe, WEO – stated policies scenario Southeast Asia and Africa but 247 developed 182 countries are 100% 100% 187 126 favorable markets 2018 2040 100% 100% for advanced 9 21 100% 100% 2018 2040 677 bioenergy 2018 2040 524 31% 471 378 59% 67% 69% 75% 41% 190 33% 138 11% 25% Modern bioenergy is the 20% 2018 2040 89% 2018 2040 “overlooked giant of the 80%

renewable energy field … but the 2018 2040 right policies and sustainability

regulations will be essential to meet its full potential. “ Dr. Fatih Birol, IEA Executive Director

Market enabler – introduction Traditional biomass Advanced biomass

101 Sources: World Energy Outlook 2019 (IEA); Kearney Energy Transition Institute

Kearney XX/ID Five main drivers 1 Feedstock 2 Infrastructure 3 Regulation 4 Technologies supply maturity and and set the market acceptance economics conditions to ease Overall regulations Waste collection Technology advanced Land use and policies related to Competition with food ecosystems biomass management economics Collection system types Capex, opex, process crops, culture rotation, NDCs, Basel Convention bioenergy and agents, dedicated efficiency energy density per area, for waste management penetration land available for infrastructures cultivation Feedstock-specific policies Technology Biomass transport Health and safety capacities performance regulations, handling and Conversion factor, energy Rail, waterways, trucks, treatment of animal by- Biomass production trailers efficiency, by-product yield products, landfill directive valorization

Public awareness Biomass treatment and Environmental movement processing facilities Sensitivity to Feedstock quality and Sustainable collection environmental issues, standards overall footprint cost Forest management, soil Organic vs. inorganic management, and so on fraction, specific processes Biomass-to-energy Behavior and pattern for biomass upgrading conversion facilities Waste management, practice, patterns of consumption and Competing uses generation of waste Energy transport and Economic conditions Other local products/ Labor costs, taxes, local activities, recycling distribution infrastructure Purchasing power economic growth

Existence of alternative 5 Substitution renewable technologies

Market enabler – methodology Sub-driver Sub-driver detailed

102 Source: Kearney Energy Transition Institute

Kearney XX/ID Feedstock supply Biomass feedstock market dynamics is the limiting factor Land Bioenergy Bioenergy of bioenergy Land use production; it demand production consumption depends on Primary land demand Consumption pattern Biomass residues 1 2 Generated as a by-product of food or wood products consumption throughout their supply- Food demand Domestic production consumption chain patterns and Food Livestock Food production remaining land use Industrial roundwood Firewood Wood demand Feedstock supply Firewood 1 Industrial roundwood International trade

Remaining lands Remaining land Primary biomass for biomass Generated directly from 3 4 farmland or forest to produce biomass Energy crops Greenfield lands unused Surplus firewood Algae

Biomass residues drivers Primary biomass drivers 1 – Primary land demand determines the theoretical potential 3 – Remaining lands determine the theoretical potential for for biomass residues, driven by the world population primary biomass, driven by the natural capacity to grow evolution and the consumption/production patterns (waste biomass (climatic, geological, geographic conditions, and so rate) on) 2 – Food and wood supply determines the technical potential 4 – Biomass production determine the technical potential for Feedstock supply – deep-dive for biomass residues, driven by the waste collection rate primary biomass, driven by value chain efficiency of harvesting, processing, and delivering

103 Source: Kearney Energy Transition Institute

Kearney XX/ID Each biomass Supply depends on: Improve manure Animal – Amount of manure generated category has treatment, fertilizer waste – Volume (%) of manure treated substitutes specific sub- – Percentage of treated manure applied to soil drivers Supply depends on: – Amount of land available for cultivation High residue ratio, lower Agricultural – Residue-to-crop ratios competing uses and – Collection efficiencies residues burning – Competing uses – Burning ratios Supply depends on: – Total amount of forest land (hectares) Forestry – Total accessible forest land (hectares) Short rotation species, Feedstock supply residues – Primary/secondary residue portion (%) of biomass stock increase forest land 1 – Collection efficiencies – Average rotation cycle Supply depends on: – Demographics (population, urban %) Improve collection, Municipal – Amount of MSW per capita change the waste – Waste composition (organic, recyclables) solid waste composition – Collection rates by type – Recycling rates by type Supply depends on: Select performant – Amount of space available for algae cultivation species, improve Algae – Attainable yield collection – Collection efficiencies

Supply depends on: Energy – Amount of land available for energy crop cultivation Select performant – Attainable yield species, use degraded crops land Feedstock supply – deep-dive – Collection efficiencies Enabler 104 Source: Kearney Energy Transition Institute

Kearney XX/ID Alternative uses of Commercially relevant feedstock applications feedstock act as competition for Competing Feedstock Description Comparison to bioenergy pathways Enablers supply and drive application – Lower investment and infrastructure available volume – Use of sanitary/managed Produce advanced biofuel, Biogas requirement, reliable end market, landfill to capture biogas from decrease investment costs for recovery adoption of more advanced WtE down natural decomposition of waste methanization pathways likely to lower advantage – Most preferred by carbon emission and – Conversion of waste into re- Recycling circularity principles, growing political Increase energy efficiency usable materials and objects focus and willingness – Waste disposed in open or Open/ – Significant environmental and health Strengthen political Feedstock supply unmanaged dumps, unmanaged hazard, reducing volume in developed willingness and environmental 1 uncollected, or otherwise landfills markets protection unaccounted for – Manufacturing of wood – Low environmental impact, in line with Secondary Improve circularity, develop products using residues like circularity principles, employs existing products local economy saw-dust, off-cuts, and so on infrastructure and labor – Significantly lower environmental Develop economical Food/bedding – Use of agriculture residue as impact, adherence with circularity alternatives or high-value end- for cattle animal food or bedding principles, limited economical products alternatives for food/bedding – Use of agriculture residue for – Not relevant for energy players, Compost for horticultural purposes, as Develop economical relatively small scale compared to other agriculture compost for mushroom alternative competing uses cultivation, and so on – Residue left on field as fertilizer – Important for sustainability, particularly Develop alternative solutions Left on field or to avoid soil erosion or loss soil health or high-value end-products of carbon content

– Use of raw animal manure as – Hazardous to health, highly distributed Feedstock supply – deep-dive Household fuel household fuel (for example, production (usually household level), Increase energy efficiency dry dung cakes) usage declining over time

105 Source: Kearney Energy Transition Institute

Kearney XX/ID Advanced biofuels Biomass potential—infrastructure adaptability benefit from their compatibility with Biomass transport and logistics mature are available at volumes required 8% 21% 21% 36% 14% by full-scale biorefineries infrastructure in Upstream Transport infrastructure is developed adequate for the marketing of 14% 7% 36% 43% countries advanced biofuel products Blending limits do not discourage investments in 50% 7% 22% 21% advanced biofuels Infrastructure maturity Downstream 2 Marine biofuels are not impeded by engine change 45% 30% 25% cost and storage infrastructure

Strongly disagree Disagree Neither agree or disagree Agree Strongly agree In 2019, the IRENA issued a Upstream – Improvement of storage facility to handle biofuels’ lower survey to 14 biofuel industry – Only 29% of surveyed people consider feedstock transport and storage executives to determine the stability and poorer storage conditions unavailable at volumes required by commercial-scale biorefineries – Reorientation of conversion facilities from fossil fuels (for main barriers to biofuels – Only 21% of surveyed stakeholders present transport infrastructure as example, coal boilers) to biomass uptake. a constraint to biofuels uptake

Downstream – Development of flex-fuel vehicles able to run on biofuels – Lack of integration of biofuels solutions in existing engines perceived – Stretch of blending limits to E15, E20, or E25 for ethanol, or as a major barrier to biofuels uptake up to B20 for biodiesel (for example, Indonesia) – Biofuels blending shares range from 0 to 7% for biodiesel and – Increase in availability of refueling stations from 5 to 10% for ethanol – Higher policy stability enabling long-term visibility for Infrastructure maturity – deep- – In Europe, 90% of petrol cars compatible with 10% bioethanol blend stakeholders dive Enabler 106 Sources: Advanced Biofuels, What holds them back? (IRENA 2019); Kearney Energy Transition Institute

Kearney XX/ID Regulation and Drivers, common outcomes, and impacts of bioenergy legislations legislation are strong drivers since they impact Driver Enabler Impact – Higher collection rates, both biomass – Focus on increasing recycling rates and reuse of Policies regarding waste execution of policies, A. Waste materials management: collection, sorting, investment in infrastructure – Reduce MSW generation per capita with regulations supply and management recycling, disposal, waste reduction, to further improve efficiency of collection and disposal – Decreased composition of regulations revalorization bioenergy demand infrastructure waste as recycling rates increase

B. Decarbonization Targets for GHG emissions – Reduce GHG emissions via lower-carbon sources of – Strengthens demand for reduction per industry sector energy (for example, emission trading schemes, bioenergy products (for targets Set up carbon credits carbon tax) example, biofuels) Regulation and acceptance – Increase share of renewables in power supply (for 3 Regulation concerning blending example, electricity) and in transport industry via – Increase competition with C. Blending (quality, quantity) in transport sector biofuels other renewables (wind, to help biofuel penetration and push mandates – Apply specific taxes on energy use (for example, solar, geothermal) the need for blended biofuels gasoline or diesel taxes)

– Train for sustainable utilization plans – Improve sustainability Land use and planning regulation D. Land use and – Strengthen policies to achieve zero deforestation and credentials of biomass such as forest management plants, increase carbon sequestration feedstocks planning arable land repartition between – Enforce agricultural planning to enhance sustainable regulations cultures – Increase complexity and repartition of arable land limit supply availability Policy support via fiscal incentives/ – Create fiscal incentives (for example, tax credits, – Support bioenergy product E. Fiscal incentives/ government subsidies managed subsidies, differential pricing) to support transition to competitiveness government and distributed by established clean energy alternatives subsidies agencies or government bodies – Enhanced initiatives and programs to support R&D – Creates risk of reliance on toward bioenergy or biofuels and innovation in renewable energy sector incentives – Increase sustainability – Develop sustainability strategies and increasing credentials of biomass F. Other Other sustainability policies or national capacity for low-carbon energy (for example, feedstocks sustainability strategies to drive green energies or feed-in tariffs, green electricity schemes) policies renewables – Focus on sustainability goals in agricultural, transport, – Reduce supply availability and energy sectors and intensify scrutiny on Regulation – deep-dive biomass value chains

Enabler Impact of legislation Positive Negative 107 Source: Kearney, Kearney Transition Institute

Kearney XX/ID Regulatory Policy examples split by legislation category and assessment framework maturity is Decarbonization Waste management Land use and Fiscal incentives/ Other sustainability targets and blending country-specific regulations planning regulations government subsidies policies and depends on mandates India US Argentina Japan Mexico

government – In 2016, the Solid Waste – Withdrawal of the Paris – Minimum Standards for the – No substantial tax – Regulatory issues and lack Management Rules Agreement in 2017 Protection of Native incentive for biodiesel, of an established supply environmental (SWM) replaced the (effective in 2019); no Forests set up in 2007, but which is subject to the chain prevented the Lagging Municipal Solid Wastes specific renewable energy the law lacks enforcement same diesel tax as on-road country from fully targets Rules of 2000, which had target at federal level diesel establishing its “clean-fuel” never been implemented strategy 3 Regulation and acceptance Russia Canada India Mexico US

Illustrative – Set up of a Russian – Intent accounted in – Aim to create an additional – Clean Energy Certificates – Currently, 23 states and Ecological Operator by the December 2016 to develop carbon sink of 2.5 to 3 (CELs) scheme where the District of Columbia

State in January 2019 to Clean Fuel Standard to billion tons of CO2 energy producers must (out of 51) have ensure sound regulation of achieve 30 million tons of equivalent through acquire a given amount of implemented statewide Emerging household waste is in annual reductions in GHG additional forest and tree certificates by producing GHG targets practice, build adequate emissions by 2030 cover by 2030 (NDC to the clean energy infrastructure for waste UNFCCC) management, and raise awareness among consumers and producers UK France Indonesia US Germany

– Waste Framework – The Law on Energy and – Temporary moratorium – Set of federal tax – National Sustainability Directive requiring the Climate sets climate (made permanent in 2019) incentives or credits for Strategy, which was United Kingdom to recycle emergency and the on granting permits to renewable energy projects adopted in 2002, sets out Advanced at least 50% of household objective of carbon clear primary forests and (Production Tax Credit, quantified goals for 21 key waste by 2020 and 65% by neutrality by 2050 in the peatlands for plantations Investment Tax Credit, areas related to 2035 law or logging Residential Energy Credit, sustainable development Modified Accelerated Cost- Regulation – deep-dive Recovery System)

108 Source: Kearney Transition Institute

Kearney XX/ID Bioenergy Biomass potential—social acceptance attractiveness is Sociopolitical acceptance Community acceptance Market acceptance Acceptance and support of general Acceptance of local residents or Adoption and support of market parties also driven by public opinion, NGOs, and government stakeholders in regard to biomass (consumers, firms, investors) social, market, and projects – Lower recognition of bioenergy as – Air pollution from bioenergy plants is a – Inattention to bioenergy from consumers, political “renewable energy” than wind or solar major concern for local communities who have misconceptions about its – Severe social controversies because of – Communities’ perception of bioenergy interest acceptance; lower expected land use or food competition plants influenced by local energy – Consumer concerns about supply security, – Low experience of farmers in bioenergy availability availability of efficient and updated than for other crops cultivation raising viability concerns technology and price renewables – Heterogeneity of NGOs’ positions – Perceived instability and uncertainty of regarding bioenergy uptake national policies by investors – Developing government support through 3 Regulation and acceptance policy implementation

– Increase consumer information on – Increase public general information – Provide quality information to the the reliability and benefits of biomass level about bioenergy solutions public all along the planning process solution – Mitigate risks for farmers through – Settle compensating measures such – Increase policy stability to provide Assessment framework of increased support actions as reduced energy costs longer-term vision and security to sustainable energy social investors acceptance through sociopolitical, community. and market acceptances was developed by Wüstenhagen et al. in 2007.

Acceptance – deep-dive Enabler

Sources: Role of Community Acceptance in Sustainable Bioenergy Projects in India (VK Eswarlal, 2014), Social Acceptance of Bioenergy in Europe (Segreto et al., 2019), Social Acceptance of Bioenergy in Europe 109 (Alasti, 2011), Social Acceptance of Renewable Energy Innovation: an Introduction to the Concept (Wüstenhagen et al., 2007); Kearney Energy Transition Institute

Kearney XX/ID Biomass-to- Projected biofuel production cost Biomethane production cost biofuel/gas is $/l $/m3 likely to remain Fossil 1st-gen Advanced biofuels more expensive fuels biofuels (2nd generation) than fossil fuels— 2.0 3.0 opportunity driven 2.5 Min and max costs by country 1.5 driven by plant size 2.0 regulation 1.0 1.5 Technologies and economics 4 1.0 0.5 0.5

0.0 0.0 2015 2015 2015 2015 2015a 2030a 2045a Energy crops Manure Industrial waste

Advanced biodiesel/biogasoline Conventional biogasoline Gasoline Historical natural gas price $1.43-3.7/mmBtu ($0.05–0.13/m3) Conventional biodiesel Diesel Historical oil price ($150–600/m3 or $24-95 which gives $0.25–0.591 for the energy content equivalent to a cubic meter of natural gas

– Improve feedstock economics with optimized production, collection, and transport – Increase size of power plant to reach economies of scale – Improve process economics with better yields, better energy efficiency (use of combined cycle or catalysts), – Decrease feedstock price by optimizing feedstock collection and identifying zone with high potential Technologies and economics – and economic valorization of the by-products deep-dive Enabler

1 To compare crude oil and gas price per cubic meter, prices were normalized with their respective energy density, 0.0364 MJ/L for natural gas and 37 MJ/L for crude oil 110 Sources: IRENA Innovation Outlook Advanced Liquid Biofuels, IRENA EU report on biogas potential beyond 2020; Kearney Energy Transition Institute

Kearney XX/ID Biomass should focus on segments without other sustainable alternatives, and 5 Substitution where storable energies are valued to get the most of its competitive advantage

Bioenergy substitution matrix

Biofuel potential by sector

Potential technologies to reduce CO2 emissions (2040 time horizon) Sector energy Substitution Biofuels Sector consumption Electrification Carbon score opportunity (Mtoe, 2018) H2 (renewables + capture

storage) storage1

diesel Bioethanol Biogasoline Biodiesel Renewable liquor Black fuels jet Bio Biomethane from Gas waste

Car 1,124 +++ ▼ ✓ ✓ ✓ ✓   ✓ 

Truck 740 ++ ▲ ✓ ✓ ✓ ✓   ✓  Transport Aviation 326 + ▲      ✓  

Shipping 251 + ▲ ✓  ✓ ✓   ✓ 

Power 4,294 +++     ✓  ✓ ✓

Energy Heat 113 +++ ▼     ✓  ✓ ✓

CHP 1,086 +++     ✓  ✓ ✓

Maturity of Commercialized Research stages Maturity of +++ At least one commercial option Potential product-sector technologies: substitution ++ At least one pilot project combination opportunity: Pilot projects Not an option options: Substitution – deep-dive + Ongoing R&D investment

1 Use of CO2 from CCS is not considered in the range of possible solutions 2 Based on 2017 figures 111 3 Minimal use of methanol in truck transport Sources: IEA WEO 2019; Kearney Energy Transition Institute

Kearney XX/ID Identifying drivers’ 1 Feedstock 2 Infrastructure 3 Regulation 4 Technologies supply maturity and and impacts on the acceptance economics – Affordability and market size of value chain bioenergy solutions, infrastructure – Pace of bioenergy solutions adaptability – Rentability and scalability of highlights the – Quantity and quality of integration – Accessibility of sustainable biomass-to-energy bioenergy available – Investors’ security feedstock investments – Value repartition between – Reduce processing and – Competitiveness vs enablers to conversion routes transport costs alternative – Overall carbon footprint of – Adopt integration targets for activate in order to bioenergy production biofuels – Increase incentives and policy improve market support on demand and offer side environment (feed-in-tariffs, tax incentives)

– Public–private partnership – Size of biofuels market and of to secure private feedstock available – Development of investment conditioning and – Increase space dedicated – Investors’ interest – Public investment to pretreatment technologies to feedstock cultivation – Level of policy support support for production improving feedstock quality – Increase feedstock scale up (roads, trains, and – Increase policy support and production and collection so on) R&D funding efficiencies – Regulations to support – Ensure communication to the – Limit feedstock cultivation energy transition (tax public impact on the environment incentives) – Increase demand-oriented incentives for bioenergy solutions – Limit bioenergy consumption in segments where competing uses are identified

– Development of conditioning and pretreatment – Price of biofuels available on market segment technologies improving feedstock quality, 5 Substitution – Penetration rate and speed of bioenergy increase policy support and funding

Market enabler – results Driver Enabler Effect on price/volume/mix No effect on price/volume/mix

112 Source: Kearney Energy Transition Institute

Kearney XX/ID Biomass-to-power LCoE1 by renewable energy source can be competitive Global, USD / kWh2, 2010–2019 with fossil fuels, Intermittent sources Pilotable sources but wind and solar 0.51 prices are 0.43 expected to fall 0.38 0.39 further 0.35 Max 0.24 0.28 0.20 0.19 0.18 0.16 0.16 0.19 0.12 0.12 0.14 0.14 0.09 0.11 0.07 0.11 range 0.07 0.14 0.07 0.08 0.08 0.07 0.11 0.05 0.05 0.05 Fossil fuel fuel Fossil 0.04 0.09 0.05 0.06 0.06 Min 0.04 0.04 0.05 0.02 0.03 0.04 2010 2019 2010 2019 2010 2019 2010 2019 2010 2019 2010 2019 2010 2019

Solar Solar Onshore Offshore Geothermal Hydro Biomass (photovoltaic) (concentrated) wind wind -17.4% -6.9% -3.7% -5.2% 4.5% 2.7% 1.6%

– Improve feedstock economics – Improve infrastructure compatibility or deployment – Improve process economics (yield, efficiency, feedstock cost, energy consumption) – Develop acceptance, leverage financial incentives and government subsidies Market enablers – results Enabler Weighted average X% CAGR (%) 2016–2018

1 LCoE = levelized cost of energy; outliers not considered in max/min but included in weighted averages 113 2 kWh = kilowatt hours Sources: IRENA, Wood Mackenzie (MAKE); Kearney Energy Transition Institute

Kearney XX/ID Drivers have The drivers of biomass will shift as enablers successively arise various evolution perspectives in the next decades 2010 2020 2030 2040 2050+ – Wider and will strongly – Biofuel from biotechnology – Cost-effective Supply of cane sugar 1 – Bio jet fuel developments biological crop influence B2E develops as the feedstocks will develops further (for example, waste fuels dominant increase biomass developed penetration technology – A much larger global feedstock) population will generate substantially – Circularity and – Wider – Collection and – Reduced more MSW and other revalorization infrastructure Infrastructures recycling are environmental waste 2 principles create development increasingly impact of – An increasing will gain in interest for that increases performed collection and infrastructure maturity maturity residues and the sustainable across the world transport and efficiency will waste potential enable better collection of the feedstock – Environmental – Maturing – Sustainability to – Maturity of Gen – Biofuels can be cost Sociopolitical concerns emerging 3 be a major focus Z will make competitive to become markets will pressures are across all sustainability petroleum based on increasingly demand more rising OECD politics non-negotiable carbon pricing and widespread sustainability industry adoption (for – Feedstock example, aviation) – Regulation and public Biofuel – Feedstock – Better management – Global 4 supply increases household practices (for population up sentiment will call for technology is despite push for practices raise example, 750 million biofuel value chains developing circularity MSW availability collection) from 2020 – Given the expected increase supply opportunities, many competitors will be – Initial interest in – Market should playing in this sector Rivals will – All oil majors are – New entrants biomass, but it have evolved to 5 increasingly looking at with proprietary remains non- produce Market enablers – forecasts opportunities in technology will look for core to energy dominant biomass be emerging opportunities players players 114 Source: Kearney Energy Transition Institute Kearney XX/ID Section 3

Conclusion: Successful business models

115

Kearney XX/ID Introduction I. Biomass-to-energy value chain 1. Feedstock overview 2. Processing methods overview i. Conditioning technologies ii. Pretreatment technologies iii. Intermediate products iv. Conversion technologies II. Biofuels market opportunities and enablers 1. Attractiveness and maturity i. Product assessment—technical diagnosis ii. Competitive advantage assessment—economic diagnosis 2. Market drivers and corresponding enablers III.Conclusion: successful business models Appendix 116

Kearney XX/ID What are the successful business models of bioenergy production? i. What are the promising commercial applications of B2E? ii. What is their market situation, the related regulations, their Key questions environmental and economic impact? iii. What is their evolution potential?

117 Source: Kearney Energy Transition Institute Five business cases studied in Europe, the US, and China show the diversity of biomass potential 1 2 3 4 5 applications

Waste to Bio jet fuel Bio- Renewable Co-firing energy In the US methane diesel In cement In the UK In China In the US industry

Energy Bio jet fuel is Renewable Co-firing production a promising Biomethane diesel is a biomass with as a waste way to is produced promising traditional management decarbonize from alternative to solid fuels is solution is aviation and biomass petroleum an efficient developed in the feedstock diesel and is way to the UK from production is digestion or developed in decarbonize MSW non- developing in gasification/ the US from the cement recyclable the US from methanation vegetable oil industry fraction forestry in China as a and waste oil without residues and substitute to and fats major oily crops natural gas infrastructure investments

118 Source: Kearney Energy Transition Institute

Kearney XX/ID Energy from waste Description Process characteristics is developed in the

UK as it combines – In 2019, 53 energy-from-waste plants were active in the UK – Process steps: Reception, thermal treatment, conversion to – Energy-from-waste stream produces 6.7 TWh (2% of UK energy, emissions clean-up energy generation total power generation) together with 1.4 TWh of heat – Technology used: Incineration, advanced thermal treatment and waste – Inputs: Municipal solid waste, commercial and industrial such as gasification and pyrolysis waste (residual) – Hot gases from the thermal step used to boil water to create management – Outputs: steam – Electricity (efficiency with indirect generation1 15-27%) – Steam used in a steam turbine to produce electricity and/or solution for heating – Heat (efficiency up to 90%) but difficulty to find the long- term customers to support the investment – Advanced thermal treatment enables further upgrading into more complex liquid biofuels – CHP (efficiency 40%) Waste to energy – Transport fuel 1 In the UK

Global market overview Drivers/barriers UK, 2019, power generation GWh 7,800 Drivers Barriers 7,200 7,100 13% – Efficiency of the plant – Discourages greater 6,200 14% 14% recycling 5,500 – Organic fraction of the 19% 15% waste – Air pollutant health impacts 4,000 – Non-intermittent partially – Lack of heat customers 18% renewable electricity due to location or relative generation cost of alternatives – Contribute to energy security – Contribute to renewable 2014 2015 2016 2017 2018 2019 share target Business case 1 Parasitic Net power2 Operation Construction 1. Indirect generation: from residual heat/hot gases 2. Parasitic power is withdrawn by the grid and has to be deduced from the power generated to obtain net power. 119 Sources: Energy from Waste – A Guide for Debate, Feb 2014, Department for Environment, Food and Rural Affairs, UK Energy from Waste Statistics 2019; Kearney Energy Transition Institute

Kearney XX/ID Incineration and Process description Key metrics thermal treatment release carbon – Reception: Receive and store waste, get it ready for Lifetime of plant 20–30 years dioxide but are combustion – Pretreatment: Material recovery, mechanical biological Residual waste 12.63 less harmful than treatment (sorting and anaerobic digestion), mechanical heat processed in 2019 (Mt) treatment Energy from waste landfill for the 41.8% (2018) – Conversion: Incineration, gasification, pyrolysis, anaerobic share on the residual 45.5% (2019) environment digestion waste market – Emissions clean-up: Ensuring waste gases are safe and 25–600 kt of waste processed per Incinerator scale meet the limits placed by EU legislation year

Waste to energy Advanced thermal 30–60 kt of waste processed per 1 In the UK treatment scale year

Feedstock characteristics Environmental performance

– Composition: Residual waste (mixed waste that cannot be – Negative net impact: Energy from waste impact (0.343 usefully reused or recycled) from municipal solid waste and tCO2eq) - avoided landfill impact (0.375 tCO2eq) = any commercial and industrial waste (C&I) -0.032 tCO2eq per ton of input waste – Waste source: In 2019, 81.5% from MSW and 18.5% from – Proportion and type of biogenic content is key to C&I environmental performance, only the energy generated by the – Organic content: Between half and two-thirds of a typical organic fraction of the waste is considered renewable black bag of waste contains biogenic carbon (renewable – Requires emissions cleaning and monitoring (dioxine/furane carbon) emissions) Business case 1 – Energetic value: Average net calorific value for residual – Incineration produces carbon dioxide only whereas MSW is 8.9MJ/kg and for C&I is 11MJ/kg landfills produce carbon dioxide and methane in equal proportion 120 Sources: Energy from Waste – A Guide for Debate, Feb 2014, Department for Environment, Food and Rural Affairs, UK Energy from Waste Statistics 2019; Kearney Energy Transition Institute

Kearney XX/ID Energy from waste Value chain stakeholders Market information Energy from waste in development is more and more Million tonnes competitive, – Market players and respective share: Viridor 22.1%, Reuse Veolia 18.6%, Suez 17.6% Valuable waste supported by 20 managers

landfill tax and Recycle 15 increasing Local authorities 10 Landfill emission controls Residual waste managers 5 EfW 0 2014 2015 2016 2017 2018 2019 Waste to energy In the UK Government 1 Unconsented Consented Refused/in appeal

Production cost analysis Key regulation and policy

MBT EfW Landfill – Historically the main treatment route for UK was landfill (suitable sites created by past mineral extraction) Gate fee range (£/t of 66–82 32–126 8–49 1989 feedstock) Tighter incineration controls 2000 Various Gate fee 80–121 Waste incineration directive waste increase for Comment range with management newer 2010 landfill tax Industrial emissions directive streams facilities Business case 1

Sources: Energy from Waste – A Guide for Debate, Feb 2014, Department for Environment, Food and Rural Affairs, UK Energy from Waste Statistics 2019, Wrap Gate fee report 2013; Kearney Energy Transition 121 Institute

Kearney XX/ID The US is one of Description Process characteristics the main emerging – By February 2020, 6 conversion processes to produce SAF markets for bio jet – Five operational plants producing bio jet fuel in the US, (Synthetic Aviation Fuel) had been certified: but only one has jet fuel as the main outcome product – Synthesized Paraffinic Kerosene (SPK) from the Fischer- fuels but their – Production ranging from 3 Mmgal/year to 160 Mmgal/year for Tropsch process (FT-SPK) uptake is still a total of 353 Mmgal/year of fuel produced – SPK from hydroprocessed esters and fatty acids – Four other plants in project with an additional forecasted process (HEFA-SPK) limited by production of 29 Mmgal/year – SPK from the alcohol-to-jet process (ATJ-SPK) – Key enablers: – SPK from catalytic hydrothermolysis (CHJ-SPK) technical and – Legal and regulatory framework – FT-SPK with increased aromatic content (FT-SPK/A) market constraints – Infrastructure deployment – Synthetic isoparaffins (SIP) from hydroprocessed – Agriculture potential for feedstock production fermented sugars (HFS-SIP) – In the US, 7 projects rely on HEFA–SPK and 2 on FT–SPK Bio jet fuel 2 In the US

Global market overview Drivers/barriers

Drivers Barriers – Biofuels expected to play Aviation energy consumption a key role in the aviation forecast by fuel type – Need for reducing – High quality standards to sector Mtoe, 2018–2040, world – emissions ensure safety – Very limited growth stated scenario – Oil price fluctuation and – High costs and funding 535 fuel insecurity – Fuel consistency and expected for alternative 26 5% – Carbon price infrastructure renewable fuels 325 185 (electricity, hydrogen) 95% – Lack of alternative – Low feedstock supply 99.9%0.1% because of a low technology readiness technological maturity – New growth market for – Timid policy incentives biofuels and high technical 2018 Oil Biofuels 2040 constraints – Green public relations Business case 2 Oil Biofuels Sources: Sustainable Aviation Fuels Guide (ICAO, 2018), The cost of supporting alternative jet fuels (ICCT, 2019), Alternative jet fuels: Case study of commercial-scale deployment (ICCT, 2017), Biofuels for Aviation: Technology Brief (IRENA, 2017), Review of Biojet Fuel Conversion Technologies (NREL, 2016), The Flight Paths for Biojet Fuel (EIA, 2015), Are aviation biofuels ready for take off? (IEA, 2019); Kearney 122 Energy Transition Institute

Kearney XX/ID HEFA appears as Process description Key metrics the most viable solution from a – Hydroprocessed esters and fatty acids SPK: Conversion yield 90% (HEFA) (tfuel/tfeedstock) 12% (FT) technical – Removal of oxygen fraction of the feedstock by hydrotreatment Jet fuel share among 15–55 (HEFA) products (%) 25–50 (FT) perspective to – Split of feedstock in different hydrocarbons (mainly diesel produce bio jet and kerosene) through hydrocracking LHV (MJ/kg) 42.8 min. – Fischer-Tropsch SPK: Density (kg/m3) 775–840 fuels – Gasification of the solid biomass at elevated Flash point (°C) 38 min. temperatures to obtain “syngas” Freezing point (°C) - 47 max. – Purification of the gas and synthesis of kerosene and Sulfur content (%) 0.3 max. other hydrocarbons in a catalytic reaction known as Bio jet fuel Maximum blending Fischer-Tropsch process 50% (FT, HEFA, ATJ, and CHJ) In the US ratio with fossil jet fuel 10% (HFS) 2 (%)

Feedstock characteristics Environmental performance

LCA GHG emissions by conversion process and feedstock1 – Variety of sources possible to produce jet fuel (including gCO2/MJ, 2018 forestry and agriculture residues or crops, waste, algae) depending on the conversion process used 200 Fossil – HEFA conversion processes are based on feedstocks with a 75 85 75 35 jet fuels high oil content, such as inedible waste oils and fats, mostly (90) animal fats such as tallow and lard, or algae 15 25 5 10 5 – FT conversion process relies on the heating of small -10 -5 feedstock particles, mainly agricultural and forestry residues HEFA– HEFA– HEFA– HEFA– FT–AR2 FT–EC2 or energy crops (corn stover, switchgrass) EC2 Algae AW2 AR2 1 Business case 2 Emissions over the whole life cycle, without land use change considerations. Negative values can be obtained because of the displacement of CO2 emissions (for example, jet fuel production from sugarcane produces bagasse which can be used as a fuel and avoids energy-related CO2 emissions). 2 EC is energy crops, AW is animal waste, AR is agricultural residues Sources: Sustainable Aviation Fuels Guide (ICAO, 2018), The cost of supporting alternative jet fuels (ICCT, 2019), Alternative jet fuels: Case study of commercial-scale deployment (ICCT, 2017), Biofuels for 123 Aviation: Technology Brief (IRENA, 2017), Review of Biojet Fuel Conversion Technologies (NREL, 2016), Are aviation biofuels ready for take off? (IEA, 2019); Kearney Energy Transition Institute

Kearney XX/ID Bio jet fuel Value chain stakeholders Market information production is not cost-competitive – Market share: The US accounts for 20% of the world bio jet fuel production (other main players are Northern Europe and Fuel yet and therefore Fuel producers Airports Singapore) distributors requires strong – Key market players: policy support – Producers: AltAir, Amyris, Fulcrum, GEVO, Red Rock… – Airlines: United Airlines (50% of bio jet fuel volume Aircraft manufacturers Airlines purchased in 2018), FedEx, AirBP, Cathay Pacific… – Infrastructure: Limited opportunities as only 5 airports have regular biofuel distribution (Bergen, Brisbane, Los Angeles, Oslo, and Stockholm) Bio jet fuel In the US Governments – Development perspectives: Low capex reduction 2 opportunities for HEFA conversion, higher ones for FT

Production cost analysis Key regulation and policy (US)

CAAFI: Pioneer initiative gathering state, airlines, HEFA FT 2006 airports, and manufacturers engaged in various activities to enable and facilitate near-term Investment range (M$) 200–700 350–1,230 development of bio jet fuels Extension of the Renewable Fuel Standards (fuels 1 2013 Capex ($/Loutput/year) 0.3–1.1 2.8–4.2 green certificates scheme) to “advanced biofuels” (including bio jet fuels) Feedstock and Opex drivers (% Feedstock (80%) plant operations 2016 Launch of the Great Green Fleet Initiative by the production costs) (15–35%) US Navy aiming to reach a 50% “green fuel” target 2020 CORSIA’s objective to reach carbon neutral growth Production costs ($/L) 0.7–1.6 1.0–2.5 for the aviation sector from 2020 on Business case 2 1 Bio jet fuel is only one of the outputs of the conversion plants (along with renewable diesel and light ends). Therefore, not all the capex is included in the bio jet production cost. Sources: Sustainable Aviation Fuels Guide (ICAO, 2018), The cost of supporting alternative jet fuels (ICCT, 2019), Alternative jet fuels: Case study of commercial-scale deployment (ICCT, 2017), Biofuels for Aviation: Technology Brief (IRENA, 2017), Review of Biojet Fuel Conversion Technologies (NREL, 2016), The Flight Paths for Biojet Fuel (EIA, 2015), Are aviation biofuels ready for take off? (IEA, 2019); Kearney 124 Energy Transition Institute

Kearney XX/ID Biomethane is Description Process characteristics forecasted to play a rising role in the – Biomethane is a near-pure source of methane (chemical – There exists two main biomethane production methods: composition CH ) produced from biomass feedstocks biogas upgrading and gasification followed by methanation decarbonization of 4 – Biomethane can be produced either through biogas – Biogas upgrading: upgrading or by gasification of solid biomass followed by the power and – 90% of biomethane produced worldwide methanation transport sectors – The annual production capacity reaches 60 million cubic – Only 2% of biogas is upgraded in Asia meters in China – Gasification of solid biomass: – Biomethane represents less than 1% of the natural gas – 10% of biomethane produced worldwide consumption in China but the number of biomethane plants has tripled since 2015 – Technique mainly used in Europe (80% of worldwide biomethane produced through gasification) Biomethane 3 In China – Possible from wood and forestry residues only

Global market overview Drivers/barriers

Drivers Barriers – Current biomethane demand represents about 0.1% of current natural gas demand – Indistinguishable from – Lack of specific policies natural gas dedicated to biomethane – World biomethane sustainable potential is estimated at – No changes required in – High capital costs for 730 Mtoe transmission infrastructure biomethane facilities Biomethane demand forecast by continent or end-user equipment – Lack of awareness, Mtoe, 2018–2040, world – stated scenario – CO emissions reduction information, and expertise, 81 2 12% and embodiment of a more especially in rural areas 47 12% 15% circular economy through – Low prices of natural gas 11% 19% 14% 13% waste use from fossil origin 16% 60% 8% 4 58% 61% – Way to provide a low- Business case 3 2018 2030 2040 carbon energy source in North America Rest of the world Europe Asia Pacific rural communities

Sources: Outlook for biogas and biomethane (IEA, 2020), IEA Policies Database (IEA Website), Calculation of GHG emission caused by biomethane (Biosurf Project, 2016), A sustainable biogas model in China: 125 the case study of Beijing Deqingyuan biogas project (Chen et al.), Opportunity and challenge of Biogas market in China (Qian Mingyu et al.), Biomethane efforts gaining traction (ChinaDaily, 2019); Kearney Energy Transition Institute

Kearney XX/ID Biogas upgrading Process description Key metrics from animal waste appears to be the – Biogas upgrading LHV (MJ/m3) 35.6–36 – Separation of the different biogas components (carbon most widely dioxide, nitrogen…) to isolate methane deployed and most – Water scrubbing: biogas is sprayed with water to Fusion point (°C) -182.47°C capture impurities in water droplets performant – Membrane separation: biogas flows through a Boiling point (°C) -161.52°C membrane separating CO and impurities from CH biomethane 2 4 – Gasification and methanation Density (gaseous, 15°C, 0,6709.10-3 production route – Pyrolysis of woody biomass (700–800°C, low oxygen 101.3 kPa) (g/cm3) environment) producing syngas (H2, CO, CO2, CH4) – Syngas cleaning followed by methanation: a catalyst is Biomethane used to provoke a reaction between hydrogen and carbon Auto-ignition point (°C) 537 In China oxides to form methane 3 – Removal of excess water and carbon dioxide

Feedstock characteristics Environmental performance

– Wood biomass is the most used feedstock for biomethane LCA GHG emissions by feedstock production through gasification and methanation gCO2/MJ biomethane, 2016 – Biogas production can rely on very different feedstocks: Fossil crop residues, animal waste, organic fraction of MSW, fuels wastewater sludge… 18 17 29 (90) 15 24 Biogas production by feedstock type 12 14 Mtoe, 2018, China – stated scenario

-85 1% 68% 31% 7 AW AR MSW EC Business case 3 Crops Animal manure Municipal solid waste

Sources: Outlook for biogas and biomethane (IEA, 2020), IEA Policies Database (IEA Website), Calculation of GHG emission caused by biomethane (Biosurf Project, 2016), A sustainable biogas model in China: 126 the case study of Beijing Deqingyuan biogas project (Chen et al.), Opportunity and challenge of Biogas market in China (Qian Mingyu et al.), Biomethane efforts gaining traction (ChinaDaily, 2019); Kearney Energy Transition Institute

Kearney XX/ID The promising Value chain stakeholders Market information development perspectives of – Market share: Farmers – Biomethane production expected to surpass 30 Mtoe in Anaerobic Biogas biomethane are China by 2040 digestion upgrading End- – 12% of the world sustainable biomethane potential plant plant Natural sustained by a Waste user operator operator gas infra- located in China management structure – 25% of world biogas demand for direct use in 2018 (share supportive policy companies operator expected to decrease to 20% by 2040 but volume expected to almost double) framework in China Forest Gasification and – Key market players: exploitation methanation plant operator – Biomethane plant operators: EnviTech biogas, Xebec, companies Gasmet Technologies… – Gas grid owner and operator: CNPC (operating 75% of Biomethane the Chinese natural gas network) In China Government – Development perspectives: High biomethane uptake 3 potential but limited cost reduction perspectives

Production cost analysis Key regulation and policy

2003 Key economics VAT reduction on biogas projects 2006– National Biogas Project Construction Plan: 65 2010 financial and technical supports to projects at Capex (¥M) (60% from anaerobic digestion system household level and to medium- and large-scale and biogas upgrade system) projects in mass production farms 2007 Opex drivers 10% per year (mainly maintenance Rural biomass development plan aiming to develop biogas access in rural areas (% production costs) and accessories costs) Guidance document issued by the National Expected payback 2019 Development and Reform Commission supporting 9–14 years period biogas upgrade in biomethane and its use in the Business case 3 transport sector

Sources: Outlook for biogas and biomethane (IEA, 2020), IEA Policies Database (IEA Website), Calculation of GHG emission caused by biomethane (Biosurf Project, 2016), A sustainable biogas model in China: 127 the case study of Beijing Deqingyuan biogas project (Chen et al.), Opportunity and challenge of Biogas market in China (Qian Mingyu et al.), Biomethane efforts gaining traction (ChinaDaily, 2019); Kearney Energy Transition Institute

Kearney XX/ID Renewable diesel Description Process characteristics is mostly produced in the – In 2019, in the US, there were five renewable diesel plants Renewable diesel can be produced through multiple processes: with combined capacity of 25.9k barrels per day – Hydrotreating of fats/oils/esters US and Western – US biodiesel and renewable diesel market (Source EPA – Fermentation of sugars EMTS) Europe and is – Coprocessing with petroleum, biomass 4,000 pyrolysis/hydrotreatment, catalytic upgrading of sugar, competing with 3,000 Fischer-Tropsch diesel (biomass to liquid)—but none of 1 these processes are done at commercial scale, biodiesel 2,000 demonstration stage only

1,000 – Currently the easiest way to produce renewable diesel is hydrotreating (removing oxygen, sulfur, and other

Millions of of gallonsMillions 0 compounds by hydrogenation) fats and oil, so it uses the Renewable diesel 2007 2010 2015 2018 same feedstock as biodiesel production; nevertheless, In the US Estimates transforming cellulosic biomass to crude oil and upgrading 4 Biodiesel Renewable diesel it is a promising differentiated pathway

Global market overview Drivers/barriers

Drivers Barriers Global production of renewable diesel: 28.5M barrels per year – Carbon reduction policies – Competition with – Financial incentives biodiesel and other renewable alternatives – Vehicle performance (electric vehicles) advantages – Feedstock nature and – Easy way to “green” a availability fleet

Business case 4

1 Renewable diesel has the same chemical structure than conventional diesel when biodiesel does not Sources: NREL Renewable Diesel Fuel 2016, Conoco Philips Renewable Diesel Study, ADI Analytics – Regulations to Drive US RD capacity growth through 2025, Valero Basics of Renewable Diesel, March 2020, 128 EIA, Neste; Kearney Energy Transition Institute

Kearney XX/ID Today, renewable Process description Key metrics diesel is mostly produced from – Co-products: naphtha, renewable jet fuel, fuel gas (likely burned on site) Renewable diesel imports from Singapore only grew 49% since waste oils and fats Importation Renewable diesel production 2015 to a record of 17k bbl/day in but use of cellulosic 2019 Feedstock biomass for its Animal fat Vegetable oil Greases Renewable diesel 75–85 Cetane number1 production is Petroleum diesel >40 upcoming Process Hydrotreating Pyrolysis Gasification No odor, no impurities decrease Specificities Renewable diesel maintenance cost for engines In the US Most widely Renewable diesel 4 used

Feedstock characteristics Environmental performance

– Composition: Today, almost all renewable diesel is produced – Relative CO2 life cycle emissions of renewable diesel are from vegetable oil, animal fat, waste cooking oil, and algal oil. 60 to 80% less than for petroleum diesel – Feedstock sources in 2018: – Renewable diesel has a low carbon intensity compared to diesel, gasoline, and even California grid electricity Soybean Distillers Canola Yellow Animal oil corn oil oil grease fats Conventional renewable fuel (D6) Required life cycle GHG reduction: 20% or more Feedstock 46% 15% 11% 15% 13% Advanced biofuel (D5) composition Required life cycle GHG reduction: 50% or more Cellulosic biofuel (D3) Biomass-based diesel (D4) – Feedstock will shift toward a higher share of cellulosic GHG reduction: 60% or more GHG reduction: 50% or more biomass: agricultural residues, dedicated energy crops (oily), Example feedstock: corn stover Example feedstock: waste oil Business case 4 and eventually algae when process maturity will increase 1 Cetane number: high cetane number is linked with the ability of a hydrocarbon fuel to have better throttle response, start up quickly in cold conditions, and consume less for low loads. Sources: NREL Renewable Diesel Fuel 2016, Conoco Philips Renewable Diesel Study, ADI Analytics – Regulations to Drive US RD capacity growth through 2025, Valero Basics of Renewable Diesel, March 2020, 129 EIA, Neste; Kearney Energy Transition Institute

Kearney XX/ID Renewable share of Value chain stakeholders Market information biofuel market in the US is growing – Market players: Neste, REG, ENI, Diamond Green – In 2019, renewable diesel capacity was around 26k barrels Local Waste fats and because of its Manufacturer per day and is expected to grow to 171k barrels per day in technical authorities oil collector the next five years in the US 200 171 advantages and 145 150 +31% 137 regulation Environmental Protection Agency 100 68 incentives 50

15 23 23 23 26 Renewable diesel Renewable Government (kbbl/day) capacity 0 Renewable diesel 2015 2020 2022 2024 In the US 4 Forecast

Production cost analysis Key regulations and policy

– Renewable diesel shows higher capital costs than – Historically the main treatment route for UK was landfill biodiesel, thus it needs larger economy of scale (suitable sites created by past mineral extraction) From agricultural Soy, rapeseed, residues and 2000 palm CCC Bioenergy Program cellulosic biomass Production cost of 2007 0.98–1.27$/L 0.8–1.3$/L Low Carbon Fuel Standards enacted by renewable diesel California Air Resources Board (CARB) Maturity Experimental stage Commercial 2020 Low Carbon Fuel Standards extended to Pyrolysis and Extraction and 2030 by CARB Process Business case 4 hydrotreatment hydrotreatment

Sources: NREL Renewable Diesel Fuel 2016, Conoco Philips Renewable Diesel Study, ADI Analytics – Regulations to Drive US RD capacity growth through 2025, Valero Basics of Renewable Diesel, March 2020, 130 EIA, Neste, Fuel processing Technology August 2019, IRENA; Kearney Energy Transition Institute

Kearney XX/ID The cement Description Process characteristics

industry was – The cement industry was responsible for 4% (1.5Gt) of – Cement production is an energy- and emission-intensive world global GHG emissions (37.9 Gt) in 2018. responsible for 4% process due to the high temperatures required to transform limestone into cement. – Process steps: Limestone is heated to produce clinker and release CO2, clinker is further refined into cement. of world global – Two types of GHG emissions have to be tackled: direct – The overall process emissions are distributed as follows, emissions (CO is released during calcination-limestone 2 fossil fuel replacement by biomass could tackle the 30% due GHG emissions in combustion) and indirect emissions (fuel is burned to heat to thermal emissions. 2018 and must the kilns). The direct emissions can be cut off with CCS and using biomass as an alternative fuel is a possible way to find pathways address the indirect emissions issue. – Biomass can be used in cement plants through two major 60% 30% 10% toward modes, namely direct combustion and transformation into decarbonization producer gas (syn gas). Process emissions Thermal emissions Electricity

Biomass in cement kilns 5 World overview Global market overview Drivers/barriers World cement production, 2018: 3.99Bt Others Drivers Barriers – Biomass can be blended – Variable availability of the up to 20%1 biomass resource subject 22% – Reduce the fossil fuel use to seasonal variations – Reduce cement industry – Conditioning and US transporting biomass 2% GHG emissions 55% associated costs and Africa 5% China – Boost local economy emissions 6% – Improve energy autonomy – Fragmented, small-scale – Reduce landfill emissions Europe 8% supply – Ashes from waste is – Storage requirements Business case 5 integrated to the clinker . India 1 Without investment to transform existing infrastructure, with a retrofit of the kilns, biomass use can reach 100%. Sources: Global CO2 emissions from cement production 1928–2018, Robbie M. Andrew, Kearney Energy Transition Institute, CEMBUREAU, UNDP Biomass Energy for cement production opportunities in Ethiopia, 131 EPA Emission factors for GHG Inventories, McKinsey Laying the foundation for zero-carbon cement, Cement Technology Roadmap 2009, IEA; Kearney analysis

Kearney XX/ID Co-processing Technical options Key metrics World, CO emissions of the global releases carbon 2 cement industry, Mt 4,700 dioxide but is less – Partial substitution: mixing crushed and pulverized biomass with coal or petcoke for use in the kiln can substitute up to harmful than 20% of the fossil fuel without requiring major investment or landfill for the changes in the process. – Direct feeding of biomass in solid lump form (such as pellets 2,500 environment, or and briquettes) into the rotary kiln and/or pre-heater/pre- 2,000 calciner combustion chamber. fossil fuel use 1,400 – Transforming biomass into producer gas (or “syngas”) and 1,000 co-firing it in the kilns using a gas burner.

Biomass in cement kilns NB: Other alternative fuels are also considered which are not in the World overview scope of this factbook: petroleum-based wastes, chemical and 1990 2000 2010 2020 2050 5 hazardous wastes. Process emissions Fuel and electricity Transport emissions

Feedstock characteristics Environmental performance

LHV CO emissions Fuel 2 (MJ/kg) (kg/GJ) – Emissions reduction: alternative fuel use can contribute 0.75Gt of CO2 reduction worldwide up to 2050 (IEA) Coal 29.3 100–110 – Proportion and type of biogenic content is key to Petcoke 33.9 108 environmental performance, only the energy generated by the organic fraction of the waste is considered renewable Furnace oil 34 74 – Co-processing produces carbon dioxide only whereas landfills produce carbon dioxide and methane in equal Natural gas 47 56 proportion Agricultural residues 16–19 1241

Business case 5 MSW 8–11 96

1 These are the relative emissions of biomass, but they account for zero in the global carbon cycle. Sources: UNDP Biomass Energy for cement production opportunities in Ethiopia, EPA Emission factors for GHG Inventories, McKinsey Laying the foundation for zero-carbon cement, Cement Technology 132 Roadmap 2009, IEA; Kearney analysis

Kearney XX/ID Biomass use in Country scale market information Global market information cement kilns is a % of alternative fuels use in cement World, % of biomass and waste penetration production, 2017 growing solution, as alternative fuels, 2018 68 but facing 2 5 10 2 15 disparities 4 44 41 Waste1 between countries Biomass 98 95 Fossil fuels 88 82 17 16 10 3 Biomass in cement kilns World overview Germany UK EU Global US Canada India 5 average 1990 2000 2010 2018

Production cost analysis Other perspectives for cement industry

– Investment: 5–15 M€ for a clinker production Key barriers for co-processing: permitting, regulations and capacity of 2Mt/a standards, supportive policies, public acceptance, cost, – Retrofit: 8–16 €/t clinker for a clinker production infrastructure, lack of qualified workforce capacity of 2Mt/a – Alternative fuel cost is forecasted to reach 30% of Cement industry has several additional possibilities to conventional fuel cost in 2030 and 70% in 2050 explore in order to reduce its GHG emissions: - Alternative fuels use - Thermal and electric efficiency - Clinker substitution - Carbon capture and storage Business case 5 1 Waste cover a mix of organic waste and waste from fossil origin (such as tires or refuse derived fuel) thus is to be differentiated from biomass. Sources: GNR – GCCA in Numbers, Status and prospects of co-processing of waste in EU cement plants (Ecofys 2017), UNDP Biomass Energy for cement production opportunities in Ethiopia, EPA Emission 133 factors for GHG Inventories, McKinsey Laying the foundation for zero-carbon cement, Cement Technology Roadmap 2009, IEA; Kearney analysis

Kearney XX/ID Bibliography (1/3)

▪ ADI Analytics – Regulations to Drive US RD capacity growth through 2025 (2020) ▪ ARUP Advanced Biofuel Feedstocks – An Assessment of Sustainability (2014) ▪ A sustainable biogas model in China: the case study of Beijing Deqingyuan biogas project, Chen et al. (2017) ▪ BERC Woodchip Heating Fuel Specifications in the Northeastern United States (2011) ▪ Biogasoline: An out-of-the-box solution to the food-for-fuel and land-use competitions (2015) ▪ Biomass and Bioenergy Journal ▪ Biomethane efforts gaining traction, ChinaDaily (2019) ▪ Calculation of GHG emission caused by biomethane, Biosurf Project (2016) ▪ Carbone 4 - Biomethane and Climate (2019) ▪ Conoco Philips Renewable Diesel Study ▪ DEFRA UK Energy from Waste – A Guide for Debate (2014) ▪ DEFRA UK Global Agro-Ecological Zones Portal ▪ EIA ▪ EIA The Flight Paths for Biojet Fuel (2015) ▪ Emerging Markets Renewable Diesel 2030 (2019) ▪ Energetica Futura ▪ EPA ▪ ETIP Bioenergy ▪ EU report on biogas potential beyond 2020 (2016) ▪ European Biofuels Technology Platform ▪ FAO Environmental impact of manure (1996) ▪ FAOSTAT ▪ Forest Research UK ▪ GNA Consultants ▪ IARC Northern Arizona University, Wood Dust and Formaldehyde (1995) ▪ ICAO Sustainable Aviation Fuels Guide (2018) ▪ ICCT Alternative Jet fuels: Case study of commercial-scale deployment (2017) Bibliography ▪ ICCT The cost of supporting alternative jet fuels (2019)

134 Source: Kearney Energy Transition Institute

Kearney XX/ID Bibliography (2/3)

▪ IEA Are aviation biofuels ready for take off? (2019) ▪ IEA Bioenergy – Biofuels for the Marine Sector (2017) ▪ IEA Bioenergy – Global Wood Chip Trade for Energy (2012) ▪ IEA Bioenergy – State of Technology Review Algae Bioenergy (2017) ▪ IEA Energy Technology Perspectives (2017) ▪ IEA Global EV Outlook (2020) ▪ IEA Market Report Series: Renewables (2018) ▪ IEA Outlook for biogas and biomethane (2020) ▪ IEA Renewables Information Database (2018) ▪ IEA Renewables Information Database (2019) ▪ IEA Technology Roadmap – Delivering Sustainable Bioenergy (2017) ▪ IEA The Future of Hydrogen (2019) ▪ IEA The Future of Trucks (2017) ▪ IEA Tracking Transport, International shipping (2020) ▪ IEA World Energy Outlook (2019) ▪ International and national climate policies for aviation: a review, Larsson et al., (2019) ▪ IPCC ▪ IRENA Advanced Biofuels, What holds them back? (2019) ▪ IRENA Biofuels for aviation: Technology Brief (2017) ▪ IRENA Fuel processing Technology (2019) ▪ IRENA Innovation Outlook Advanced Liquid Biofuels (2016) ▪ IRENA Renewable Energy Policies in a Time of Transition (2018) ▪ IRENA Renewable Power Generation Costs (2018) ▪ IRENA Technology Brief (2017) ▪ IRENA Traditional Biomass Energy Bonn (2004) ▪ IRENA Understanding the Opportunities of Biofuels for Marine Shipping (2019) ▪ Macroalgae-Derived Biofuel: A Review of Methods of Energy Extraction from Seaweed Biomass, Milledge et al. (2014) Bibliography ▪ NESTE Renewable Diesel handbook (2016)

135 Source: Kearney Energy Transition Institute

Kearney XX/ID Bibliography (3/3)

▪ NREL Renewable Diesel Fuel (2016) ▪ NREL Review of Biojet Fuel Conversion Technologies (2016) ▪ Oak Ridge National Laboratory ▪ Opportunity and challenge of Biogas market in China, Qian Mingyu et al. (2019) ▪ Ramboll ▪ Rice Knowledge Bank ▪ Role of Community Acceptance in Sustainable Bioenergy Projects in India, VK Eswarlal (2014) ▪ Social Acceptance of Bioenergy in Europe, Alasti (2011), ▪ Social Acceptance of Bioenergy in Europe, Segreto et al. (2019), ▪ Social Acceptance of Renewable Energy Innovation : an Introduction to the Concept, Wüstenhagen et al. (2007) ▪ US DOE Alternative Fuels Data Centre and Alternative fuel price report (2020) ▪ US DOE Billion Ton Report (2016) ▪ UK Energy from Waste Statistics (2019) ▪ Valero Basics of Renewable Diesel (2020) ▪ Wood Mackenzie (MAKE) ▪ World Energy Council ▪ WRAP Gate Fee report 2020

Bibliography

136 Source: Kearney Energy Transition Institute

Kearney XX/ID