Sustaining Southern Competitiveness

Gary Peter Southern : The Renewable Biomaterial, Bioenergy & Chemicals Star

• Meets all sustainability metrics – Economically viable for multiple products – Top1-3 industries in most SE states – Positive energy & negative CO2 – Positive impact on environment • Largest supply chain in world • Largest source of virgin “long” fiber • Expansion of saw timber in region • Expansion of pellets • Potential for biochemicals & biofuels

Impact of Silviculture & Tree Improvement on Harvest Volume, Rotation Length & Markets

600 60 500 50

/ha) 400 40 3 300 30 Years 200 20 Yield (m Yield 100 10 0 0 1940 1950 1960 1970 1980 1990 2000 2010 Total YieldWoodRotation AgeCost & Abundance Plentiful, Cost Effective Wood Supply Stimulates Processing Technology Innovation

• Kraft pulping • Recovery of wood hydrocarbons • Fiber cement • Packaging • Torrified pellets • Curve saws • Biofuel from lignocellulosics • • for carbon fiber • Wood pellets •

Southern Pine Markets

BIOMASS BASED LAND BASED • Existing • Existing – Poles – Hunting/recreation – Solidwood – Conservation easements – Chip-n-saw – Minerals – – Fill dirt – Pine straw – Real Estate • Potential • Potential – Energy wood – Ecosystem services – Logging residues – Oleoresin

Sustaining Increases in Productivity

8000 60

Fox, T.R., E.J. Jokela and H.L. Allen.

2007. J. 105:337-347. 50

6000 40 4000 30 (ft3 /ac) 20

Volume atHarvest Volume 2000 10 Rotation age (years)

0 0 1940 1950 1960 1970 1980 1990 2000 2010

Establishment Decade

• Good silviculture • Good Genetics – Stand establishment – Faster growing families • Site prep, weed control – Better disease resistance – Density management – Fertilization

IMPAC II Study Age 2

Age 3 Height Fertilizer + Herbicide 20

15

10 Height (ft) 5

0 1986 2012

Subedi et al. 2014 Loblolly Deployment

• 95% deployed as OP, FS, clones • OP families –still the current standard, 84% • FS families –becoming more popular, ~8% • Clones or varieties – ~2% • Seed orchard mix – almost none, ~ 5% Forest productivity results from the combined effects of many factors

Nutrient Genetic C Management Deployment L S I O M 12 I A t/ac/y L T S E Competition Density Control Management

Loblolly at year 14 Slash at year 14 Culture Planting Total CNS Total Pulp CNS Density (m3/ha) (%) (%) (m3/ha) (%) (%) H N 415.9 78.9 20.6 377.0 68.5 30.8 H W 372.4 19.3 80.2 318.8 18.2 77.3 L N 284.2 95.1 1.5 349.1 95.5 3.0 L W 266.8 51.4 48.5 283.5 43.6 56.3 Landowner Growing System is a Central Decision that Depends on Local Markets

• Balancing costs with yields & local markets • How to add flexibility while maximizing returns? • Additional products earlier & later in rotation

Market priorities for different trees/ha Generalist vs. Specialist Dilemma

Generalist Specialist • Characteristics OK for all • Characteristics maximized markets, but good for for one primary product highest value market • Market size • Additional products while • Market value main product grows to • Going to scale increase returns

• Create new “markets” without sacrificing ability to compete in current “best” markets • Need to identify alignment & synergies What traits can justify investment? Challenge for Genetic Improvement

• Long development cycle + long rotation = focus on traits that are good for large and stable but inherently “local” markets • Going to scale – Is value added to landowner and other business in the supply chain? • Increased growth/yield/diameter of defect free trees are only things that pay (now) – good for all markets – Wood quality not paid for directly (yet)

Examples

• Juvenile wood stiffness – Dimensional from younger trees – Oriented strand lumber • Lignin content & composition – Enhanced pulp & sugar yields – Enhanced bioenergy - biofuel yields – Lignin for new products? • Wood – Extractable pine chemicals & drop-in biofuels Oleoresin Canal System

• Oleoresin flows out of stem after wounding, typically by boring insects – Constitutive resin under positive pressure in resin canals • The wood resin canals form a 3D network for synthesis & storage of mono- &

diterpenes Loblolly pine resin canals

• Thin walled resin canal RC epithelial cells epithelial cells line the canal and synthesize and secrete Longitudinal RC into the lumen of the canals or duct History of Southern Pine Terpene Industry Extract Main Species Collection Products Chemical Main Uses ERA Material Separation Composition Gum 1700s Slash & longleaf Tree tapping Turpentine, Monoterpenes Sealing turpentine – Diterpenes ships, & 1940 Living trees Fire, batch & turpentine continuous still distillation Wood 1900 Slash & longleaf Destructive , Monoterpenes Paints, turpentine - distillation Turpentine, & cyclic , 1940s Lightwood Batch & pine tar, terpene floor continuous still dipentene, alcohols wax… α distillation -pinene only Wood 1940 Slash & longleaf Solvent –steam Rosin, Monoterpenes , turpentine - extraction turpentine, Diterpenes paints, & rosin today Lightwood Vacuum pine oil, Fatty acids rubber distillation dipetene Sterols Crude tall 1960 Loblolly & slash Kraft pulp mill Rosin, , Monoterpenes Large oil & – turpentine Diterpenes diversity crude today Fatty acids of Pulpwood Vacuum sulfated Sterols products distillation turpentine Pine Terpenes: A $3 Billion Global Industry

• Pine Terpene collection 3 million tonne/yr – Turpentine (monoterpene) rosin (diterpenoids) – Gum terpene (60%), crude sulfated turpentine & crude tall oil (35%), wood (5%) • Gum terpenes collected by tapping living trees > 850,000 tonne/yr – China, Portugal, USSR, Brazil, Indonesia, Mexico, India – China >500,000 tonne/yr [60% of global supply but little is exported] • Pulp & industry collects terpenes as a co- product – Crude sulfated turpentine & Crude tall oil (CTO) – US south 450,000 tonne/yr of CTO

Pine Chemicals A $3 Billion/Y Industry • Global pine oleochemical industry

refines gum terpenes, CST & CTO into a large number of chemical products – Focus of industry on mono & diterpenes (rosin/resin acids) • Flavors, fragrances, chemicals, pharmaceutical, food…. • Current pine extractives sold as biofuel – UPM Kymmenye, SunPine • Renewable diesel – Az Chemicals, MWV • Pitch fuel – mix of triglycerides and other hydrocarbons

Pine Chemicals Industry Supply

2014 estimated production In 2010, US industry shipped Gum CTO CST $1.92 billion in products & spent (MMT/Y) (MMT/Y) (MMT/Y) $940.8 million (49% of shipment Global 1.2 – 1.4 1.5-1.6 0.15 value) on raw terpene supplies N. America 0 0.82 0.098 SE US 0 0.80 0.090 Economic Benefits of the Pine Chemicals Industry, 2011, Am. Chem. Council Predicted change in global supply -2% to + 2% Global Rosin Production

Tall oil + Wood Rosin Gum Rosin

1600

1400

1200

1000

Unsustainable Unsustainable

800 kton/y

600 Sustainable Sustainable 400

200

0 & Sustainable Predictable 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Year

Source = A. Cunningham – Pine Chemicals Association 2014 Intl. Meeting Growth of Pine Chemicals Industry is Supply Limited

• Supplies of raw terpenes constrain industry growth not market demand – Decline in US pulp mills limit CST & CTO supplies • Since early 90’s, CTO supply has decreased by >15% • Competition for pine pulpwood for OSB, pellets, biofuels? – Change in pulping processes affecting CST & CTO yields – Variable available supply from China – Chinese labor costs & number of “tappable” trees negatively affecting oleoresin supply – China building internal processing capacity – In Finland, UPM Kymmenne is using CTO for biodiesel production

P. elliottii, Angatuba, Brazil A. Cunningham Pine Chemicals Industry Supply 2014 estimated production CTO CST Oleoresin (MMT/Y) (MMT/Y) (MMT/Y) Global 1.5-1.6 0.15 1.2 – 1.4 N. America 0.82 0.098 0 SE US 0.80 0.090 0

• Options for rapidly increasing supply – Capture more monoterpenes (need cost effective technology/changes to processing) • Improve recovery in pulp mills (avg today is 15%) • Start capturing in engineered wood and wood pellet facilities (avg today is 0%); SE uses 25 million tons of pulpwood y-1 for engineered wood alone – Oleoresin collection from live trees • Domestic production from existing slash pine plantations – Induce resinosis to more than double tree terpene content in conjunction with or independent of oleoresin tapping FL Office of Energy Project Objectives

Develop more cost effective method to collect pine terpenes for renewable chemicals and biofuel production from live slash pine trees

Assess stand management, tree characteristics and age on oleoresin yield

Assess feasibility and impact of expanding collection of oleoresin and terpene based jet fuel production in Florida

Borehole Tapping Borehole tapping method developed by Dr. Alan Hodges involves drilling holes into pine trees to reach resin ducts in the xylem and collect oleoresin

Advantages of borehole tapping over conventional resin production method (Hodges 1995) : Reduce tree stress Improvement of product quality Increased labor productivity Decreased insect pest problems Minimum damage to harvestable timber Taken From: Rodrigues et al. 2011 Borehole Oleoresin Tapping System

Worker installing spouts in boreholes

Drilling boreholes with Stihl portable drill

Utility vehicle with barrels for oleoresin Collection in HDPE or nylon bags collection 15 Y Site: Effect of Pine Straw Treatments

• Significant effect (p=<0.0001) of pine straw raked site – PS 944 g/tree vs. No-PS 726/tree (avg of 30% increase across all treatments) • Best treatment with pine straw raked site was 1.5 Tukey C C B AB AB B A AB HSD kg/tree Automated Drilling Method

15 year old thinned site 539 trees drilled  Two Treatments

1 2 Treatment High Gum Slash Pine Trees

22 y Average of Average of Max of Group DBH (in) Yield (g) Yield (g) 1 10.6 2,618 3,800 2 10.1 2,672 4,050 3 10.7 1,730 3,800 Grand Total 10.4 2,546 4,050 Likely Scenarios for Oleoresin Tapping of Slash Pine Plantations

• Growth and yield models for slash pine stands reported by Pienaar et al. (1996) and modified b Scenarios Description Site Planting to allow fertilizations (Bailey et al. 1999) and Indexa density thinnings (Bailey et al. 1982, Pienaar, 1995) (m) (trees ha-1) were used to determine the merchantable volume of sawtimber (st), chip-and-saw (cns) Baseline Timber production 21.4 1500 and pulpwood (pw). The stem diameter at R1 Timber and oleoresin production 21.4 1500 breast height and merchantable top diameter used to define the three forest products were R2 Timber and oleoresin production with two-fold 22.8 1500 29.2 and 17.8 cm for st, 19.1 and 15.2 cm for increased oleoresin yield and higher tree growth cns and 11.4 and 7.6 cm for pw. through genetics • Based on Hodges and Johnson (1997) and R3 Timber and oleoresin production in high forest 25 1500 Hodges (2000) the annual borehole oleoresin productivity sites production is calculated as function of the diameter at breast height:

R4 Timber and oleoresin production with decreased 21.4 1000 – = (0.086 0.826) planting density • In this equation, is the oleoresin yield in 𝑣𝑣𝑟𝑟 𝑛𝑛 𝑑𝑑𝑑𝑑푑 − R5c Timber, pinestraw and oleoresin production. 21.4 1500 kilograms (kg) per hectare (ha), is the 𝑟𝑟 Pinestraw raking between age 8 and 15. average tree diameter𝑣𝑣 measured at breast 𝑑𝑑𝑑𝑑푑 R6 Timber and two-fold increase in production due to 21.4 1500 height (cm) and is the number of trees per ha. genetics The expression between parentheses on the 𝑛𝑛 a right hand side represents the oleoresin yield Height reached by the stand's dominant and codominant trees at a reference age of 25 per tree. years. bAll scenarios: weed control prior establishment, banded weed control at age 1, c • We consider that the borehole oleoresin fertilization at ages 5 and 15. Weed control at ages 7,11 and 15. Fertilization at age 11. tapping is conducted for a period of three years, and the initial age of tapping is set when the ≥ 23 cm. 𝑡𝑡𝑡𝑡 𝑑𝑑𝑑𝑑푑 Present Value of Tapping Pine Trees for Oleoresin with Current Costs & Prices

Scenario Site Stocking Age of Rotation Timber Oleoresin Present values over one rotation Land Increase in index tapping age mass at mass expectation from harvest Oleoresin Timber Pinestraw Total value oleoresin 𝐿𝐿𝐿𝐿𝐿𝐿 tapping

- R Mg ha-1 m Tree ha-1 𝑡𝑡𝑡𝑡..……𝑡𝑡𝑡𝑡years……. Mg ha-1 ..…………………..US$𝑃𝑃𝑃𝑃𝑟𝑟 𝑃𝑃𝑃𝑃𝑓𝑓 ha-1………………𝑃𝑃𝑃𝑃𝑠𝑠 𝑃𝑃𝑃𝑃𝑡𝑡 𝐿𝐿𝐿𝐿𝐿𝐿 % Baseline 21.4 1500 n.a 23 327 n.a n.a 1796 n.a 1796 2692 n.a R1 21.4 1500 21-23 23 341 3.0 190 1826 n.a 2016 2950 9.6 R2 22.8 1500 19-21 22 371 3.05 213 2384 n.a 2597 3892 8.9 R3 25 1500 17-19 22 420 3.11 240 3391 n.a 3631 5447 7.2 R4 21.4 1000 17-19 22 275 2.15 166 1703 n.a 1870 2802 9.7 R5 21.4 1500 20-22 23 366 3.04 202 2176 727 3105 4544 4.6 R6 21.4 1500 21-23 23 341 6.00 379 1826 n.a 2208 3228 19.9

The average stumpage prices for southern pine sawtimber, chip-and-saw, and pulpwood between 2008 and 2012 were assumed as $35 m-3, $21 m-3, and $12 m-3, respectively (Timber Mart South, 2008-12). The price of pinestraw was assumed to be $0.5 bale-1 (Susaeta et al. 2013). Oleoresin prices for landowner $0.19 – 0.40 kg-1 (Hodges, unpublished). Table above reports values at $0.19 kg-1 Oleoresin Tapping More than Offsets Reductions in LEV Incurred by Extending the Rotation Past Optimal Harvest Age • Optimal rotation age occurs when LEV is maximal. Returns decrease when harvesting is delayed. • Modeled the ability of oleoresin tapping to offset declines in LEV from loss of timber value when the rotation is extended • LEV declines by 10% 3-4 years after optimal harvest age due to loss in timber revenue and increased interest (discount rate) costs

LEVf LEVr LEVps 6000

5000 369 1010 5078 4000 319 4580 1064 981 724 296 3574 668 555 3000 278 495 3225 3184 1112 2672 2672 2000 2423 2588 2298 LEV ($/ha) 1000 0

Scenario-Harvest Age Advantages to Landowner for Terpene Enhanced Pines • Existing pine chemicals industry in SE • High demand for terpene feedstock New product • Limited global supply with large • Efficient conversion of pinene to jet fuel market • Living trees tapped before harvest Early revenue • Install taps or sell tapping rights • Synergy with pinestraw raking • Terpene revenue offsets loss from TEP late harvest Greater • Offsets revenue loss from lower management initial stocking flexibility • Potential for higher price for Synergy with energywood and pulpwood existing market • Tree growth and terpene yield are positively correlated • Tapping does not affect final yield and wood quality Increasing Pine Terpene Supply

Genetics Tapping Gum Plantation Turpentine Oleoresin Rosin In-tree stimulation

Existing New Facilities Facilities Improved recovery

CST Turpentine Increased CTO Rosin supply Turpentine FA

5/18/2015 32 Future Pine Chemicals Industry

Biosynthesis TE-Pine

Live Pulp Rosin OSB LVL Bioenergy Biofuels Extraction Tree mill mill mill mill

Wood VOC VOC Oleore- CTO Turpen CTO Crude Conde Conde sin & CST tine & & CT Products nsate nsate Rosin

Gum α-pinene Tall Oil-FA Wood Distillation Turpentine β-pinene Tall Oil-Rosin Rosin Products & Rosin Minor MTs Sterols, Pitch

Final Specialty Flavors & Industrial Aviation Biodiesel Products Chemicals Fragrances Biofuels Biofuels Summary

• Well aligned with existing markets but adds value across the supply chain, but most importantly to the landowner – Ideally does not affect ability to sell trees into current markets • High terpene wood to promote tapping and renewable chemicals with existing infrastructure Acknowledgements

COLLABORATORS FUNDING • University of Florida • DOE/ARPA-E – John Davis, Chris Dervinis, • ArborGen Jennifer Lauture, Alejandro • Cooperative Forest Genetics Riveros-Walker, Jared Research Program Westbrook – Arborgen, Foley, Florida Forest • ArborGen Service, Georgia Forestry Commission, Packaging Corp of – Will Rottmann America, Plum Creek Timber, • NREL Rayonier, Weyerhaeuser – Mark Davis, Robert Sykes, Li z • Forest Biology Research Ware Cooperative • University of California, – Plum Creek Timber, Rayonier, Berkeley Weyerhaeuser, RMS, F & W • Univ. California, Berkeley – Jim Keasling, Jim Kirby, Blake Simmons • Univ. of Florida Terpene Enhanced Pine Supply & Value Chain

Short Seedling • Increased seedling sales rotation Provider • Higher seedling price pine

Landowner/ • Early revenue In-tree Grower • Higher value product terpene • Increased flexibility collection

Stem harvest • High efficiency High & Transport harvesting biomass • Specialized collection yield

Chip-n-saw Pulp/paper • Increased co- Lignocellulosic Solidwood CST & CTO products • New co-products Biorefinery Engineered Oleochem. • C & H rich fuel Wood Refinery • Biomass to fuel Enabling New Markets

• Cost of production determines potential for new process and product development – Biomass rotations judged against optimal BLV/LEV defined by current markets • Munsell & Fox, 2010 Biomass & Bioenergy 3 x 8 yr rotations need stumpage of $11/grn ton & $19/grn ton biomass for similar value to one 24 yr integrated product rotation

Oleoresin Flow is Genetically Controlled: Estimated F1 genetic gains in oleoresin drymass under varying selection intensities in loblolly pine

site h2 Fold-increase Fold-increase Fold- breed top 10% breed top 5% increase breed top 1% CUT 0.137 1.618 1.736 1.977 NAS yr 6 0.303 1.856 2.051 2.409 NAS yr 7 0.239 1.801 1.977 2.333 PAL 0.118 1.536 1.614 1.768 ALL 0.117 1.608 1.717 1.918

h2: narrow sense heritability Project Summary

Resinosis Increased Five fold Increased Improved Resin increase in terpene enzymes canal wood synthesis Increased #/volume terpene carbon

Combinatorial Discovery 20% wood terpene engineering

Technoeconomic Modeling Forest tree growth Value Chain Analysis & Proposition Terpene recovery Germplasm providers Commercialization Partners Fuel production Landowners Pulp & paper Biofuel Producers Harvesting/transport Wood products Bioenergy Wood processors Oleochemical Refiners Fuel synthesis Flavor & Fragrances