WORKING PAPER 2017-12

Indirect greenhouse gas emissions of in the European Union

Authors: Sammy El Takriti, Stephanie Searle, and Nikita Pavlenko Date: 27 September 2017 Keywords: biofuel, Renewable Energy Directive, lifecycle analysis, indirect land use change (ILUC)

Introduction Annex IX is limited to 1.7%, to ensure a with significant indirect GHG competitive advantage for advanced emissions (ICF International, 2015). On November 30, 2016, the fuels in Part A of the Annex, which So far, diversion effects have not been European Commission (2016c) are at an earlier stage of commer- accounted for in biofuels regulation, in published a proposal to the Council cialization. The greenhouse gas the EU or elsewhere. Considering that of the European Union (EU) and (GHG) emission savings from Annex the EU is looking to promote advanced the European Parliament to recast IX biofuels would be required to be biofuels from waste, residues, and Renewable Energy Directive (RED) at least 70% for installations starting byproducts, such effects should be 2009/28/EC (European Parliament operation after January 1, 2021. taken into consideration in assessing & Council of the European Union, GHG emissions. 2009), which will expire at the end Within the Annex IX, Part B in the of 2020. The proposed new directive proposed RED II, molasses is defined In this context, the purpose of this (henceforth referred to as RED II) as follows: paper is to assess the market and GHG would enter into effect on January impacts of molasses diversion to fuel 1, 2021. Fuel suppliers would be “Molasses that are produced as a use, and determine if it would meet required to include a minimum share by-product from of [sic] refining the 70% GHG reduction threshold of of energy from advanced alterna- or beets the RED II. We describe the production tive fuels produced from non-food provided that the best industry and use of molasses globally and in sources, including feedstocks listed standards for the extraction of the EU to understand the indirect in Annex IX of the directive. The sugar has been respected.” effects of promoting molasses as a target for advanced alternative fuel in feedstock for biofuel. We also review transport increases to 6.8% of trans- Molasses was not listed in Annex IX literature on the GHG impacts of portation fuel consumption by 2030. in the previous version of the RED, biofuel production from molasses, and although EU member states had the conduct a displacement analysis to The list of feedstocks in Annex IX of the option to add feedstocks to this list directive is separated into two parts: and allow the amount of molasses assess the indirect GHG emissions of Part A lists a series of feedstocks for biofuel that is consumed to be counted molasses ethanol in the EU. the production of advanced biofuels, twice toward their obligations under including algae, bio-waste from the RED (called double counting). Sugar refining and households and industry, industrial France is the only country in the EU production of molasses and agricultural residues, and energy that added molasses to the list of crops. Part B includes three conven- advanced biofuels, although without The production of refined sugar tional low-carbon biofuel feedstocks, applying double counting (Ministère involves three main phases: harvesting the use of which in biofuel has already de l’Environnement, de l’Énergie et de of sugar crops, production of raw sugar been commercialized: used cooking la Mer, 2016; Vierhout, 2016). in a raw sugar factory, and refining oil (UCO), animal fats, and molasses. of raw sugar into in a Within the mandate, the contribution Diverting waste, residues, and refinery (FAO, 2009). The two major from biofuels and biogas produced byproducts from their current uses to sugar crops globally are from feedstocks included in Part B of produce biofuels can be associated and sugarcane. Sugar beet is grown

Acknowledgments: This work has been generously supported by the European Climate Foundation. Thanks to Nic Lutsey, Chris Malins, Dermot Buttle, and Jori Sihvonen for helpful reviews.

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in temperate regions, and sugarcane Sugar beet Crystallization Molasses C is grown in tropical and subtropical 14% Sugar C 50% regions. Approximately 20% of the 97% world’s sugar production comes from Molasses B sugar beet, and 80% comes from 63% sugarcane. In the EU, the majority of sugar is produced from sugar beet, Crystallization Sugar B and a small quantity is produced 98% from sugarcane in overseas territories Extraction, Molasses A (European Commission, 2014). purification and 73% The basic processes for sugar evaporation production are detailed in Figure 1 Crystallization Raw sugar Refining White sugar for sugar beet. The processes are 94-99% 99.5% similar for the production of sugar Thick juice from sugarcane. Beets are sliced and 65-70% processed to produce a juice that is rich Intermediate in sugar. This raw juice is purified and Feedstock Process product Final product concentrated by evaporation of water, to produce thick juice (Armishaw, Figure 1. Simplified sugar production flowsheet. The sugar content of the various 2002; Südzucker, n.d.). Thick juice materials is indicated in percent of total mass. Adapted from Krajnc & Glavič (2009) and is then evaporated in vacuum pans Morrison (2008). and seeded with pulverized sugar to for additional sugar production as produced; this is known as vinasse initiate the crystallization process. a result of their high levels, (also called slop, stillage, distiller’s This results in the formation of sugar but they also can be used for other wash, molasses spent wash, or crystals suspended in . A centrif- purposes, such as ethanol production dunder) (Zali, Eftekhari, Fatehi, & ugation process separates the sugar (Castañeda-Ayarza & Barbosa Cortez, Ganjkhanlou, 2017). Vinasse is thus a crystals from the adherent syrup. The 2016). Final sugar beet molasses leftover fraction of molasses. Vinasse crystallization of sucrose is carried has an unpleasant taste, but final is mainly used in feed to improve feed out in multiple stages—typically three sugarcane molasses has a sweet intake and digestibility (Bilal et al., stages—and the separation products taste and can be consumed directly 2001; Iranmehr, Khadem, Rezaeian, of each stage are usually identified by (OECD, 2007). Afzalzadeh, & Pourabedin, 2011) by the letters A, B, and C (Krajnc & Glavič, providing protein and minerals (more 2009). The first stage yields Sugar Heuzé et al. (2015) noted that the on animal feed below). Because of its A, and the run-off syrup that was type of molasses is rarely mentioned high potassium and nitrogen content, separated in the centrifuges is called when molasses is traded. We have vinasse can also be used as fertilizer Molasses A. Molasses A still contains a also observed this in most of the large fraction of sugar, and the crystal- reviewed literature, where the type of for arable crops, such as sugar beet, lization and separation process can molasses is not specified. According sugarcane, rapeseed, potatoes, and be repeated, resulting in Molasses B. to Brander et al. (2009a), in practice corn, but these uses are less common Molasses B can also be crystallized all traded molasses is final molasses. (Brouwers & Farinet, 1999; Johnson & for additional sugar production. For the purpose of this analysis, Seebaluck, 2012; Krick, 2017). The remaining syrup is called final we also assumed that the sugar Figure 2 shows average composi- molasses (also called Molasses C, industry follows practices such that tions of molasses from sugarcane blackstrap molasses, residual syrup, the maximum amount of sugar is and sugar beet (Heuzé et al., 2015), run-off syrup, or ); it cannot be extracted from molasses, and that all and of concentrated vinasse from further crystallized for additional sugar the molasses traded on the market is sugar beet (Hansa Melasse, n.d.). production. Sugar obtained from the final molasses. The composition of molasses and first crystallization Stage A is known vinasse depends on a number of as raw sugar, which can be refined into One major use of molasses is as a white sugar. obtained from the substrate in fermentation industries, factors, such as variety of crops, second and third crystallization stages for the production of alcohol and season of production, or processing can also be refined and sold. yeast. When molasses is used as a technology; consequently, the substrate in fermentation processes, chemical composition can show In traditional sugar mills, intermediate a byproduct containing most of considerable variation (Carioca & molasses (types A and B) are used the protein and mineral content is Leal, 2017; Curtin, 1983; Dotaniya et

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al, 2016; Stemme, Gerdes, Harms, &

Kamphues, 2005). Sugarcane final molasses Uses of molasses

Final molasses from sugar beet Sugar Beet and sugarcane is used mainly in final molasses livestock feed, yeast production, and to produce ethanol both for human consumption and for fuel. Other Sugar Beet concentrated applications include use as a flavoring vinasse agent in some foods; as a component of material for de-icing of roads; and 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% as a substrate for the production of % of dry matter biopolymers, bioemulsifiers, enzymes, Protein Mineral matter Sugar Other ephedrine, antibiotics, and vitamins (Šárka, Bubnik, Hinkova, Gebler, & Figure 2. Composition of sugarcane final molasses, sugar beet final molasses, and sugar Kadlec, 2012, 2013). Such niche appli- beet concentrated vinasse, in % of dry matter. Data from Hansa Melasse (n.d.), and Heuzé cations were not considered further in et al. (2015). this study because data and statistics Molasses is also used as a nutrient (Krajnc & Glavič, 2009). The choice of on these uses were lacking. Generally, substrate in fermentation industries which feedstock is used to produce sugar beet molasses and sugarcane to obtain a range of products, sugar or ethanol depends mainly molasses serve different markets: including baker’s yeast, and various whereas sugarcane molasses is on the market values of sugar and organic and amino acids (Bilal et al., favored in the food and feed markets ethanol, and the optimal configura- 2001; FAO, 2001; UNIFERM, 2010). because of its better taste, sugar beet tion of production outputs requires a Bescond (2017) estimated that sugar molasses is used predominantly for techno-economic assessment of costs beet molasses represents 90% of yeast and ethanol production and, to and benefits (Halasz, Gwehenberger, the substrate used by the EU yeast a lesser extent, as animal feed. & Narodoslawsky, 2007; Johnson industry, and the remaining 10% is & Seebaluck, 2012; Krajnc & Glavič, Molasses is used in livestock feed sugarcane molasses or syrup 2009). In Brazil, factories have a because of its nutritive and physical (also called sugar ). Availability flexible operational configuration that properties. It is mixed with other of molasses has been a concern allows switching between Molasses livestock feed, such as cereals for the yeast industry for several A, B, and C and raw juice for ethanol (Archimède & Garcia, 2010; Comité years—the main concern being that National des Coproduits, 2012). enabling biofuel production from production. In India, only Molasses C is Molasses can supplement poor molasses would result in an increase used for ethanol production (Johnson quality feed as a source of minerals in the purchase price of molasses, & Seebaluck, 2012): because of a (e.g., calcium, sodium, potassium, and in a decrease in the supply of decision by the government of India, magnesium, sulfur). Also, by stimulat- raw materials available (Bescond, sugarcane raw juice cannot be used for ing the multiplication of bacteria in the 2017; COFALEC, 2006; European the production of bioethanol because rumen, molasses can also improve the Parliament, 2017; Guichard, 2014). of possible impacts on the food digestion of fibrous feed (pastures and Telles (2008) estimated that the production of the country (Ministry of hay) and increase milk production (da shortage of molasses caused by the Petroleum & Natural Gas, 2015). Using Costa, de Souza, de Oliveira Simões start of government intervention in mathematical modeling to assess the Saliba, & da Costa Carneiro, 2015; the EU sugar market (more detail economically optimal strategy for Emanuele & Sniffen, 2014; Prairie View below) led to molasses prices rising co-producing sugar and bioethanol, A&M University, 2012). Besides being by 50% and a corresponding 10% Krajnc & Glavič (2009) found that the used as an energy source for livestock, increase in yeast prices in 2008. margin between the optimal strategies molasses is also used as binding agent in feed mills—to allow the production Lastly, molasses is used as a feedstock for sugar and/or ethanol production of pellets that are less likely to break for ethanol production, both for is very slim: depending on the prices down during transportation, and as an human consumption and for fuel. Raw of sugar and ethanol, situations arise anti-dusting agent to reduce dustiness juice, intermediate juices, molasses, where it is more profitable to divert in fine-particle feeds (Heuzé et al., and their mixtures are all suitable as Molasses A, Molasses B, or thick juice 2015; Lardy & Schafer, 2016). feedstocks for ethanol production to ethanol production.

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Because the optimal strategy for Consumption Biofuel use Feed Price the production of sugar and ethanol (ktonnes) (ktonnes) (ktonnes) (import price, Europe) (USD/t) 70,000 250 depends mainly on the market prices of these commodities, it is 60,000 200 difficult to assess the extent to 50,000 which the inclusion of molasses in 40,000 150 RED II will have an impact on sugar 30,000 and molasses production in the ktonne s 100 USD/tonne EU. Further promoting molasses as 20,000 a feedstock for bioethanol could 50 10,000 lead to a reduction in the amount of molasses available for the other 0 0 1996 1998 2000 2002 2004 200620082010 20122014 sectors, an increase in the price of molasses, and eventually a reduction Figure 3. World molasses consumption and price (data from OECD & FAO, 2016) in the production of sugar, because there is a potential risk that sugar 2014. Molasses is mostly used in availability and price of molasses have refiners would deliberately modify the country of production, and been significantly affected by the the production process to increase about 10% of the world production European sugar market. Under the the sugar content of final molasses, is exported to the world market (6 current sugar regime implemented or directly divert higher grade million tonnes exported in 2014). in 2006, the European Commission molasses such as Molasses A and B The main producers are, in order, manages the EU sugar market by con- to bioethanol distilleries. Brazil, India, Thailand, China, the trolling the supply/demand balance. EU, Pakistan, and the United States. This is achieved through quotas to The European Commission’s language The largest exporters are, in order, regulate production, combined on molasses in RED II includes the Thailand, India, Pakistan, Indonesia, with protection against imports condition that the best industry and Australia (OECD & FAO, 2016). (European Parliament & Council of standards for the extraction of sugar Figure 3 shows the global consump- the European Union, 2013). The EU’s should be respected (European tion of molasses and its consumption sugar production quota regime will Commission, 2016c). However, it in the feed and biofuel sectors. OECD end in September 2017, and EU sugar gives no indication on what the best & FAO statistics (2016) do not specify prices are expected to decline and industry standards for the extraction what the other uses of molasses are, become aligned with world market of sugar are. To our knowledge, however it can be assumed that the prices (Informa PLC, 2015). EU there is no formally defined industry third most important use is in the sugar output is expected to reach standard of best practices related to fermentation industry (bakery and 6% above its 2016 production level the extraction of sugar in or outside brewery yeasts). by 2026, when the EU is expected of the EU. If the initial intention of to become a net exporter of white the European Commission is to The uses of molasses show consid- sugar (European Commission, 2016a; prevent sugar refiners from deliber- erable variation between countries. Terazono, 2014). This will also have an ately increasing the sugar content In Brazil, 84% was used for biofuel impact on the price and availability of of molasses, it appears that such in 2014, while it amounted to 58% in molasses in the EU. language would not be sufficient. India (OECD & FAO, 2016). The use A more realistic safeguard could of molasses for bioethanol globally There are few publicly available include specific recommendations, has increased from 15% in 1996 to statistics on the amounts of molasses for example, a maximum amount 45% in 2014, whereas the use in feed used in the different sectors in the of sugar content in molasses on a has remained broadly constant in EU. Some authors have estimated the dry matter basis that is used as raw absolute value (13 million tonnes to 16 share of different uses of molasses in material in bioethanol distilleries. million tonnes) (OECD & FAO, 2016). the EU; however, the estimates vary These values should be treated with widely (see BIO-TIC, 2015; Brander et Existing markets for caution because there are some dis- al., 2009a; COFALEC, 2007; Guichard, crepancies in the data. 2016). The following estimates are molasses based on different sources and are WORLD MARKET EUROPEAN UNION MARKET the ones used in the displacement analysis below. The global production of molasses The EU is the world’s main producer of (from sugarcane and sugar beet) beet sugar and the principal importer According to OECD & FAO (2016), the amounted to 64 million tonnes in of raw sugarcane for refining. The total amount of molasses consumed

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in the EU amounted to 4.5 million Total consumption (ktonnes) Feed (ktonnes) Price (USD/tonne) tonnes in 2015 (Figure 4), including 1.5 10,000 200 million tonnes of imported molasses. 9,000 180 Molasses consumed in the feed 8,000 160 sector amounted to 1.5 million tonnes, 7,000 140 which is probably mostly imported 6,000 120 sugarcane molasses (European Feed 5,000 100 Manufacturers’ Federation, 2016), ktonne s 4,000 80 and the quantities used in the other USD/tonne sectors are not specified by OECD & 3,000 60 FAO (2016). According to COFALEC 2,000 40 (2015), EU yeast producers buy 1,000 20 around 0.8 million tonnes of sugar 0 0 equivalent per year. Assuming that 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 90% of this amount is from sugar beet molasses (Bescond, 2017), and Figure 4. Molasses consumption and price in the EU (data from OECD & FAO, 2016) because sugar beet molasses is only around 60% sugar in dry matter molasses (European Commission, produced in soybean cultivation and (Figure 2), we can estimate that the 2010), or 0.2% of the energy content processing. LCA studies will typically yeast industry consumes about 1.5 of transport fuels in road and rail. allocate some soybean cultivation million tonnes of sugar beet molasses However, Searle, Pavlenko, El Takriti, and processing emissions to soymeal per year. Based on those values, & Bitnere (2017) found that, under and the remainder to soy oil. Similarly, we can deduce that the quantity of the proposed energy target of the some studies allocate a portion of the molasses used for the production of RED II, molasses ethanol would be cultivation and processing emissions ethanol would amount to about 1.5 more economically competitive than of sugar crops to molasses. million tonnes. the other two feedstocks of the Annex IX, Part B, and so there could It is not clear, however, that this is nec- essarily the best approach to account BIOFUEL PRODUCTION UNDER be an incentive to increase imports of molasses or molasses ethanol. for the effects of using molasses for THE PROPOSED CAP FOR biofuel. If we assign an allocated ANNEX IX, PART B FEEDSTOCKS portion of upstream feedstock In the European Commission’s Lifecycle assessment production emissions to molasses, proposal for RED II (European Assessing the GHG impact of a product we are in effect saying that increased Commission, 2016a), molasses is requires methodological choices to use of molasses for biofuel will result included in Part B of Annex IX, carry out a lifecycle assessment (LCA). in increased sugar production and together with used cooking oil and Existing LCA standards such as ISO thus the emissions associated with animal fats. In the proposal, the 14040 (International Organization for cultivating and processing sugar biofuels and biogas produced from Standardization, 2006) do not provide crops. A soybean farmer may decide those feedstocks is limited to 1.7% of a rigid set of guidelines for calculat- to plant more soybean if there is the energy content of transport fuels ing GHG emissions. Consequently, an increased demand for soymeal, in road and rail. The projected busi- researchers have a range of choices in because soymeal accounts for a large ness-as-usual energy demand in road formulating a goal, scope, and method- fraction of the value of the soybean, and rail transport is estimated at 278 ology to assess the direct and indirect but it does not seem likely that sugar million tonnes oil equivalent (Mtoe) GHG impacts of a given product. farmers will plant more sugarcane or in 2030 (European Commission, sugar beet because of an increased 2016b). The total amount of molasses For product systems that generate price of molasses. consumed in the EU in 2030 would a variety of different outputs, the probably not exceed 5 million tonnes, GHG emissions must be attributed The allocation approach helps answers based on projections of the European somehow among the multiple the question: “How can I account Commission (2016a) and OECD & outputs, generally based on how for the emissions associated with FAO (2016). This means that, if all the much “responsibility” a given output producing molasses?” Instead, we molasses consumed in the EU was bears for the manufacturing process. could ask: “If I use molasses for biofuel, used to produce ethanol by 2030, the For example, soybean production what will the net effect be on global amount of ethanol would be about generates both soymeal and soy oil; markets and land use?” This is the 0.6 Mtoe, assuming a conversion both of these valuable products bear type of question that indirect land factor of 227 liters of ethanol/tonne some responsibility for the emissions use change (ILUC) modeling aims to

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answer, typically using global economic • Account for fuel production by the agency and the new carbon models. A simpler method that aims and transport emissions plus an intensities are not disaggregated to answer the same question is a dis- allocated portion of upstream (ARB, 2017). In general, the pathways placement analysis that predicts the emissions of the primary sugar assessed by ARB appear to have market impacts of removing a biofuel crop (upstream emissions may or substantially lower carbon intensi- feedstock from its existing non-biofuel may not include ILUC emissions ties than the results published by the uses. Hence, a displacement analysis from the sugar crop), and Renewable Fuels Agency (2010). For estimates the additional indirect • Account for fuel production and example, the legacy pathway appli- emissions associated with manufactur- transport emissions plus indirect cation for Copersucar’s facility Usina ing substitutes for molasses’ existing emissions from a displace- Barra Grande (ARB, 2015) estimated uses when molasses is diverted to ment analysis (the displace- direct emissions from molasses biofuel production. ment analysis may or may not ethanol production and transport to be 8 gCO e/MJ. Only 2 gCO e/MJ is include ILUC for the replacement 2 2 In the following sections, we materials). attributed to ethanol production in review previous studies that aim this pathway because the ethanol to understand the lifecycle GHG Only one of the studies reviewed conversion process is powered using emissions from molasses biofuel here and included in Table 1 assessed sugarcane as a feedstock; using either the allocation approach direct emissions for the production bagasse is assumed to have no or a displacement analysis. We then and transport of molasses biofuel. upstream emissions. conduct a new displacement analysis The Renewable Fuels Agency (2010) using the research presented above assessed imported molasses ethanol; All of the other studies reviewed here on the EU molasses market. this value does not include upstream focused on accounting for feedstock emissions from sugar cane production, production emissions. Studies that LITERATURE REVIEW including only the transport of the estimated feedstock production OF GHG IMPACTS OF feedstock, conversion of molasses to emissions based on allocating a MOLASSES ETHANOL ethanol, and transport of the finished portion of upstream emissions from fuel (Table 1). The Renewable Fuels sugar production provided estimates This section includes a review of the Agency (2010) estimated the direct ranging from 15 to 29 gCO2e/MJ literature on the direct and indirect emissions of ethanol molasses origi- (Table 1). ARB also allocates a portion lifecycle GHG estimates for molasses nating from Pakistan and South Africa of sugar production emissions, but ethanol. The methodologies of the as 77 gCO e/MJ and 87 gCO e/MJ for again, this detail is not provided studies assessed in this literature 2 2 molasses, respectively. The conversion for current pathways. In the legacy review vary widely, with some phase is the single highest contributor pathway application for Copersucar’s allocating a portion of upstream to the lifecycle emissions of ethanol, Usina Barra Grande facility, ARB emissions from sugar production, as both of these regions’ conversion assessed total upstream emissions and others conducting a displace- facilities are assumed to be powered to be 21 gCO2e/MJ (ARB, 2015). In ment analysis. Within the studies that entirely by coal combustion. However, addition, ARB allocated a portion of allocate upstream emissions from the report found that conversion a coproduct credit of -12 gCO2e/MJ sugar production, some include land emissions are lower if the molasses is for the use of bagasse to power the use change emissions, while others processed into ethanol in the United sugar mill as well as export bagasse- only account for other direct emissions, Kingdom, with a carbon intensity of 39 derived electricity to the grid; this is such as fertilizer use and agricultural in addition to the use of bagasse to gCO2e/MJ using coal and natural gas machinery. To facilitate our comparison, for power. The UK carbon intensity for power the ethanol conversion process. all of the GHG emissions values were feedstock and fuel transport emissions Net upstream emissions are thus 9 normalized into a functional unit of in this report was assumed to be zero, gCO2e/MJ for this pathway. gCO2e per MJ (grams of carbon dioxide which is not realistic. equivalent per megajoule of ethanol). Three of the studies reviewed here Generally, there are three schools of The California Air Resources Board that included allocated upstream thought on how to account for the (ARB) assesses direct carbon inten- emissions from sugar production full lifecycle emissions of molasses, sities for actual biofuel producers did not include ILUC emissions for although some studies only assess a participating in the Low Carbon Fuel sugarcane (Gopal & Kammen, 2009; portion of the full lifecycle calculation Standard program. Detailed infor- Khatiwada, Venkata, Silveira, & they are supporting: mation about these calculations is Johnson, 2016; and Tsiropoulos et al., available for some historical biofuel 2014). ARB does add sugarcane ILUC • Account for only fuel production pathways (ARB, 2016), but these emissions for all molasses pathways and transport emissions, pathways have been reassessed it assesses; the current value is 12

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gCO2e/MJ. Total emissions for all nutritional quality. On the other hand, from Pakistan and the upper end of molasses ethanol pathways assessed the yeast industry does not seem to the range by UK wheat. The authors by ARB, including direct emissions have such access to economically assumed that importing molasses from fuel production and transport, attractive alternatives to molasses. from Pakistan would utilize molasses allocated upstream emissions from Furthermore, the authors could not that otherwise would have been sugar production, and ILUC, range find sufficiently detailed information disposed of, but did not research other about the use of molasses as a growth from 38 to 54 gCO2e/MJ (ARB, 2017). uses of molasses in Pakistan or verify medium for yeast production to assess that a significant amount of molasses Two studies reviewed here estimated substitutes. In contrast, Searle et al. is actually disposed of in that country. displacement emissions rather than (2017) estimated average displace- allocating a portion of sugarcane ment effects, assuming displacement Table 1 provides a summary of the production emissions: Brander et al. would occur evenly across livestock research on the fuel carbon intensity (2009a) and Searle et al. (2017). These feed and yeast production; this is the impacts of molasses ethanol. The table two studies used similar methodolo- weighted average approach. shows how some of the studies analyzed gies with some differences. The main only direct emissions from molasses Brander et al. (2009a) calculated difference is that Searle et al. (2017) ethanol conversion and transport, or the costs of alternative animal feed accounted for molasses displacement allocated upstream emissions (direct components based on metabolizable from both livestock feed and yeast, with or without indirect emissions while Brander et al. (2009a) only energy content. They then assumed from land use change) or indirect accounted for displacement from that compound animal feed providers emissions from displacement. These livestock feed. would be likely to source the energy different approaches for estimating components of their feed based on lifecycle emissions of molasses ethanol Brander et al. (2009a) utilized an price, and identified imported molasses order-of-dispatch approach, which from Pakistan, barley, and wheat as the result in a wide range of values. Mainly, consists in determining which existing cheapest and most likely alternative accounting for feedstock production uses would be displaced first based sources of energy to replace molasses emissions, whether through allocating on a number of factors, such as price, in compound feed. A substitution ratio a portion of sugar production emissions consumer preference, or regulatory was also calculated for the identified or through a displacement analysis, has constraint. The study determined alternative feed components, based a substantial impact on total lifecycle that use of molasses in livestock feed on the metabolizable energy content emissions compared to estimating fuel would be displaced first, followed by of the components relative to the production and transport emissions yeast production, because there is a energy content of molasses. The alone. However, in most cases, these wide range of components used in the authors calculated a range of indirect methodological differences have much less of an effect on the final production of livestock feed and some emissions of 18 to 75 gCO2e/MJ; flexibility to change the composition the lower end of the range reflects result than the underlying assump- of inputs while maintaining energy and replacement by imported molasses tions behind each study, for example

Table 1. Literature review of GHG emissions of molasses ethanol.

Allocated upstream Fuel production (direct with or without and transport indirect) emissions Displacement Total (direct + Country/ (direct) emissions for sugar production (indirect) emissions indirect) emissions

Reference Region (gCO2e/MJ) (gCO2e/MJ) (gCO2e/MJ) (gCO2e/MJ) Brander et al. (2009a) UK 18–75 Renewable Fuels 77–87 for imports; UK Agency (2010) 39 for domestic Air Resources Board 38–54 (includes 12 (2017) (current carbon Brazil for ILUC) intensities) Gopal & Kammen Brazil 15 (2009) Khatiwada et al. Indonesia 29 (2016) Tsiropoulos et al. India 24 (2014) Searle et al. (2017) EU 29–36

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whether assuming coal or bagasse as diverted molasses can differ based the basis of metabolizable energy (in the energy source in fuel production. on the region or industry in question. calories per unit of mass). In the case of molasses, there are DISPLACEMENT ANALYSIS FOR important differences between We assume that compound feed MOLASSES ETHANOL IN THE EU regions in the share of use of molasses producers would switch to other in the different sectors. Because such low-protein feedstocks based on Our literature review revealed that a level of detail is not available for their price per unit of metabolizable displacement analyses estimating the regions outside or within the EU, we energy. Furthermore, we assume that displacement impacts of molasses assessed the indirect impact at the vinasse, the liquid resulting from the ethanol in the EU are scarce. EU level rather than differentiating production of ethanol from molasses, Therefore, to estimate the indirect between regions. would be given to livestock. We emissions associated with molasses assume that vinasse had no sugar, use for biofuel in the EU, we develop As molasses is diverted to fuel and that the protein and mineral a displacement analysis to estimate production, we assume that displace- matter present in molasses remains the emissions associated with manu- ment occurs simultaneously across in vinasse. Considering a sugar facturing the materials that would both non-biofuel uses of molasses content of molasses at 63% (on a dry be used to replace molasses. As relative to their proportions in the matter basis, based on Heuzé et al., described above, the most common EU (i.e., a weighted average of both). 2015), this means that the non-sugar non-energy uses of molasses in the EU Based on the amount of molasses compounds representing 37% of are as feedstock for the manufacture used in the yeast sector (1.5 million molasses are returned to livestock of yeast and compound feed. tonnes) and in the feed sector (1.5 and are not associated with any GHG million tonnes) in the EU, we find that emissions. Put another way, 63% of The displacement analysis presented the proportions of molasses in the molasses by dry weight would be here is similar to the one carried out non-biofuel uses are 50% in yeast and converted to ethanol, and 37% would by Searle et al. (2017), which assessed 50% in feed. Each tonne of molasses comprise vinasse; the vinasse fraction the GHG impact of several feedstocks used for bioethanol will therefore does not lead to indirect emissions. in the Annex IX of the proposed RED, divert 0.5 tonnes of molasses from Consequently, the main impact of including molasses. The basic method yeast production and 0.5 tonnes of molasses diversion from feed to is to identify the applications from molasses from compound feed. bioethanol production would be a which molasses would be diverted if it reduced amount of energy in the total is used for biofuel, identify the replace- In the production of yeast, glucose feed. This diverted energy content ment materials that would then be used syrup produced from starch can be from molasses would be substituted in those applications, and estimate the used as a substrate instead of, or by other crops. In the EU, the main GHG emissions resulting from increased combined with, molasses (Spigno, sources of compound feed are corn, production of those materials. This Fumi, & De Faveri, 2009). Due to lack wheat, and barley, representing 22%, methodology also draws upon Brander of data on the direct emissions and 21%, and 15%, respectively, of the et al. (2009b), although instead of an origin of in the EU, total compound feed used in 2016 order-of-dispatch approach, this study we assume that molasses would be (European Commission, 2016b). In calculates the weighted average dis- replaced by raw juice from sugar beet. terms of price per energy, barley and placement emissions across all other corn are the least expensive and are uses of the feedstock. We did not To understand the substitution effect thus assumed to replace molasses in use the order-of-dispatch approach on the compound feed sector, it is feed. The average prices of barley and because it requires estimating the necessary to assess which potential corn in 2016 in the EU were 0.047 and volumes of biofuel produced from a feed is most likely to replace molasses. 0.049 €/Mcal, respectively, calculated particular feedstock, and, following our This depends on the price of the from 143 €/tonne and 160 €/tonne estimates, the cap of 1.7% included in alternative feed and its composition. (European Commission, 2017), and Annex IX, Part B of the proposed RED In reality, a precise estimate of the based on metabolizable energy II would be large enough to allow the substitute feed would require complex contents of 3.0 Mcal/kg for barley conversion of all molasses currently modeling, because the substitution and 3.3 Mcal/kg for corn (Hilton, n.d.). consumed in the EU. effects of a feed in a market are The proportion of corn and barley are complex and depend upon a number taken from the current ratio of these Regional differences as well as of factors, including the amount, price, two ingredients in EU livestock feed sectoral differences are important to and quantities of other commodities (European Commission, 2016b). consider when assessing displace- available (Hazzledine, Pine, Mackinson, ment emissions. The emissions from Ratcliffe, & Salmon, 2011). For this The direct emissions of sugar beet, manufacturing a replacement for analysis, we determine substitutes on corn, and barley are taken from typical

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values for the cultivation emissions feed sector, this will cause livestock • The amount of molasses used in for those crops included in the RED farmers to switch to alternative the yeast industry assumed to be II proposal (European Commission, compound feed such as barley, and 0.7 million tonnes instead of 1.5 2016a), and their indirect land use the increase in demand of compound million tonnes. change emissions are taken from Valin feed will result in an overall increase in • The feed replacement composi- et al. (2015). The conversion yields of its price, which will result in an increase tion changed to 100% barley or ethanol from sugar beet, corn, and in the price of meat products, for 100% corn. barley are taken from the European example. Demand for meat products Commission (2010); the ethanol will decrease, and this will result in The resulting indirect emissions range conversion yield for barley is taken lower livestock production, lower from 26 to 45 gCO2/MJ. as the ethanol conversion yield for livestock feed consumption, and lower coarse grains. emissions associated with producing To illustrate the net GHG savings livestock feed. We assume the demand for molasses ethanol, we add this Following ICF International (2015), reduction effect to be 10%, because result to the direct emissions for the we select substitute materials with this is roughly consistent with the level conversion of molasses to ethanol and elastic supply, to avoid conducting of food demand reduction factored transport for the Copersucar facility second- and third-order displacement into ILUC models (reviewed in Malins, described above (8 gCO2e/MJ). analyses. For example, an increasing Searle, & Baral [2014]) and with Our estimate for the total lifecycle demand for molasses in biofuel may estimates of indirect fuel use change emissions of molasses ethanol is thus lead to greater volumes of molasses (reviewed in Malins, Searle, & Pavlenko 41 gCO2/MJ (with a range of 35 to imported to the EU from Brazil, where [2015]). This effect somewhat reduces 53 gCO2/MJ). This represents a 57% molasses would otherwise be used the impact of material displacement. (range of 43% to 63%) reduction of to produce ethanol. Because Brazil net GHG emission when compared to The key assumptions of our would still have a high demand for the fossil fuel comparator provided in displacement analysis are summarized ethanol, the country would produce the proposed RED II (94 gCO /MJ) in Table 2. 2 higher quantities of sugarcane than (European Commission, 2016a). it would in the baseline scenario. The net result would thus be an Table 2. Key assumptions for the increased use of sugarcane. Applying displacement analysis. Implications the approach recommended by ICF The description of the production and Parameter Assumption International (2015), we assume that use of molasses globally and in the molasses used for biofuel can only Displacement Additional production of molasses of sugar beet, with EU in this study helps us understand be substituted in other uses (e.g., in yeast direct and indirect that there are indirect effects of livestock feed) by materials with a production emissions promoting molasses as a feedstock supply that can be increased. Such an Additional production Displacement for biofuel. A literature review on the of barley and corn, approach would short-circuit a double of molasses in GHG impacts of biofuel production with direct and displacement analysis by assuming compound feed indirect emissions from molasses indicates that most EU molasses is replaced by sugarcane studies do not account for displace- (in our analysis, we assume increased Demand reduction for 10% demand ment effects due to the diversion of sugar beet production, but the results substitute reduction molasses from its non-biofuel uses would be very similar for sugarcane). materials to bioethanol production. Our own Following Searle et al. (2017), we displacement analysis assesses the The resulting indirect emissions are indirect GHG emissions of molasses assume a 10% demand reduction in calculated as 32 gCO /MJ. A sensi- 2 ethanol in the EU and finds a carbon the non-biofuel uses of molasses. tivity analysis is carried out through intensity reduction of 57% (with a The reasoning behind this is that an varying the following parameters: increase in demand for a material due range from 43% to 63%) based on to a biofuel mandate will lead to an • A 10% increase and decrease of reasonable sensitivity of the input increase in the price of that material, the ethanol conversion yields data. From this analysis, we determine and as a result, other users of the (e.g., the default conversion yield that molasses ethanol would not meet material will reduce their overall con- for corn ethanol is 0.30 tonnes of the 70% GHG reduction threshold of sumption. To illustrate: an increase in biofuel per tonne of corn, and in the EC’s proposed RED II regulation, molasses demand for bioethanol will the sensitivity analysis the yield if we account for all GHG lifecycle increase the price of molasses. In the varies from 0.27 to 0.33). analysis emissions.

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