The Bio-Economy Where Do Materials Fit?
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NNFCC The Bio-Economy Where Do Materials Fit? Dr John Williams Head of Materials NNFCC June 2013 building sustainable supply chains NNFCC The Bio Economy The aggregate set of economic operations in a society that use the latent value incumbent in biological products and processes to capture new growth and welfare benefits for citizens and nations. These benefits are manifest in product markets through productivity gains, enhancement effects and substitution effects, additional benefits derive from more eco-efficient and sustainable use of natural resources to provide goods and services to an ever growing global population. Source: OECD building sustainable supply chains NNFCC Towards a low carbon economy Improve efficiency Fossil fuel substitution Replacement of oil based materials GHGemissions End of waste Source: Adapted from ‘GHG Emission reductions with Industrial Biotechnology’: Assessing the Opportunities, WWF & Novozymes building sustainable supply chains NNFCC The UK’s national centre for renewable energy, fuels, chemicals and materials Policy delivery Strategic Market thinking analysis Technology evaluation bio-economy development building sustainable supply chains NNFCC EU Renewable Energy Directive European Governments focussed on Bioenergy Mandatory EU target of 20% renewable energy in overall energy consumption by 2020 UK Target – 15% Electricity Heat Transport 40 30 2020 20% 20 47% 2006 10 2008/9 33% 0 Electricity Heat Transport building sustainable supply chains NNFCC Interest in bio-based chemicals - Why now? Policy Support Feedstock Technology Pressure Drive Market Demand building sustainable supply chains NNFCC The Bio-based economy Land & Fuels & Chemicals & Materials Agriculture Energy Healthcare Energy Renewable Bio- Platform Bio- Land use BTL Biogas Crops Construction polymers Chemical actives Communication and Events Team building sustainable supply chains NNFCC World biomass production 170 trillion tonnes Non utilised Utilised 4% Biomass utilised by humans 6 billion tonnes 96% Food 5% 33% Wood (energy, 62% paper, furniture construction Non-food (clothing, chemicals) Source: Product overview and market projection of emerging bio-based plastics PRO-BIP 2009, Utrecht University building sustainable supply chains NNFCC Ecosystem Services • Provisioning • Food, water, energy, chemicals • Regulating • Control of climate, control of disease • Amenity/cultural • Recreation, spiritual • Supporting • Biogeochemical cycles – C and N, Crop pollination, biodiversity building sustainable supply chains NNFCC Renewable Energy Directive Mandatory EU target of 20% renewable energy in overall energy consumption by 2020 UK Target – 15% Electricity Heat Transport 40 30 2020 20% 20 47% 2006 10 2008/9 33% 0 Electricity Heat Transport building sustainable supply chains NNFCC Current energy supplies are compartmentalised – very little integration across sectors Agriculture Food/feed Gas North Sea Gas Gas grid Heat treatment Petrochems Petro materials Heating/heavy Oil Crude Oil Refineries Marine/Rail Road / Off Transport Road Air Coal Power Nuclear Power stations Electricity grid Renewables building sustainable supply chains NNFCC Biomass can serve all sectors – integrated production of heat, power, fuels, and chemicals including recyling of bio- based chemicals and food/feed wastes. System is complex Agriculture Food/feed Gas grid Heat Pellets / chips Heating/heavy Biomass Oil (from Ag, biorefineries biofuels Transport Forestry, waste etc) biochems Bio materials Power stations Elec grid Power building sustainable supply chains NNFCC RTFO Year 1 Biofuel supplied - 1,284m litres of fuel, 46% average GHG savings Volume of feedstock, litres Oilseed rape Palm Diesel Blend - Fatty acid methyl Soy ester (FAME) Sugar Beet Sugar Cane Petrol Blend - Ethanol Tallow UCO Unknown Other building sustainable supply chains A wide range of NNFCC Pure Plant Oil biofuels can FAME / FAEE potentially be manufactured Oil seeds/ Vegetable Hydrogenated cleaned waste oil Vegatable Oil oil, Algae from bio wastes DME Diesel Engine Synthetic Diesel Methane Butanol Cereals Furanics Sugars Sugar Cane Ethanol and Beet ETBE Ligno- Syngas Petrol cellulose incl. Upgraded Engine bio derived Pyrolysis Oil wastes Pyrolysis MTBE Oil Methanol Fuel Cells Hydrogen building sustainable supply chains NNFCC Bio-materials • Global biofuel markets supported by subsidies or mandated targets • No financial market support schemes for bio-materials • Therefore – Evidence for sector interest? – Evidence for sector activity? – What factors are driving the development of bio-materials? building sustainable supply chains NNFCC Interest from chemical producers • Reduce exposure to crude oil prices • Reduce process energy costs (industrial biotechnology) • Potential for novel functionality • Reacting to supply chain demands • Green premium??? building sustainable supply chains NNFCC Crude Oil (petroleum) 300 Commodity Chemical Prices (spot market) 250 1600 200 1400 150 1200 Price index - 100 Monthly Price Value Price index, 2005 = 100 1000 50 Naptha $/tonne Europe CIF 800 0 Price Phenol €/tonne Jul-86 Jul-89 Jul-92 Jul-95 Jul-98 Jul-01 Jul-04 Jul-07 Jan-09 600 Jan-85 Jan-88 Jan-91 Jan-94 Jan-97 EuropeJan-00 FD Jan-03 Jan-06 Ethylene $/tonne 400 Europe CIF 200 0 Source: ICIS Chemical Business building sustainable supply chains NNFCC Crude oil (petroleum) and Agricultural Commodity , Price index 300 250 200 Crude Oil 150 Agricultural Commodities 2005 100 = Commodity Food 100 50 0 Jan-85 Jan-87 Jan-89 Jan-91 Jan-93 Jan-95 Jan-97 Jan-99 Jan-01 Jan-03 Jan-05 Jan-07 Jan-09 Source: International Monetary Fund building sustainable supply chains NNFCC building sustainable supply chains NNFCC Global Bio-based plastic Capacity Growth 5 4.5 4 Crank et al 2005 3.5 Crank et al 2005 Pro-BIP 2009 Low growth 3 Pro-BIP 2009 High growth Pro-BIP 2009 Company announcements 2.5 Pro-BIP 2009 Company Expectations 2 European Bioplastics 2008 Consultant Data 2009 1.5 Consultant Data 2009 1 Consultant Data 2009 Pro-BIP 2009 BAU 0.5 0 building sustainable supply chains NNFCC Epichlorohydrin from glycerol Cl2 Cl + HCl • Solvay Epicerol® process • Demonstration - Tavaux, Cl2, H2O France Cl Cl OH OH • Commercial HCl + + HCl HO OH • Plant location - Map Ta Phut catalyst OH Cl Cl • Capacity 100,000 tonnes • Glycerine demand – 120,000 NaOH tonnes • Start Up - Q1 2012 O + NaCl Cl building sustainable supply chains NNFCC Propylene glycol from glycerol • ADM – Propylene glycol OH H2, cat. OH HO OH HO • Plant location – Decatur US • Capacity 100,000 tons DOW Chemical Company - Status unknown Huntsman Corporation – Status unknown Cargil/Ashland – Capacity 65,000 tonnes, location Europe building sustainable supply chains NNFCC Growth in US ethanol building sustainable supply chains NNFCC Ethylene Value Chain ETHANOL Commodity NGLs ETHYLENE Polyethylene Styrene Commodity Refined Products Monomer Polymers/Rubbers Ethylene Coal/Methanol Polyester Oxide/Glycol Biomass/Ethanol Vinyls Chain PVC Miscellaneous Vinyl Acetate Alpha Olefins Speciality Elastomers Synthetic Ethanol building sustainable supply chains NNFCC Bio-ethylene near market activity • No technical hurdles for the production ethylene from biomass • Braskem (Brazil) • Planned HDPE production • Capacity 250,000 tonnes/year Q4 2010 – 1Mt end of 2012 • Dow/Crystalsev (Brazil) • Planned Polyolefin production 2011 • Capacity 350,000 tonnes/year • Solvay (Brazil) • Planned PVC and PVA • Same economic considerations as fossil based production, feedstock cost and availability, construction and operating costs, access to market etc building sustainable supply chains NNFCC Ethylene Economics 200 Current Wheat price >Euro 240 per ton For a wheat price, typical of a balanced to 160 long market, ethylene derived from Laggard bioethanol makes green polyethylene Plant 120 competitive with petrochemical derived High harvest routes in a high crude oil price world Leader Wheat price 80 Plant Current wheat price ~ £110/tonne Wheat price, Euros per ton 40 Current crude oil price ~ $75/bbl Leader Laggard 0 20 30 40 50 60 70 80 90 100 Crude oil price,$ per bbl building sustainable supply chains NNFCC DOE’s Top 12 Bio-derived building blocks O O O O HO OH O HO OH HO OH O Succinic acid 2,5-Furandicarboxylic acid 3-Hydroxypropionic acid NH2 O O OH OH O O HO OH OH HO HO OH O OH OH O NH2 Aspartic acid Glucaric acid Glutamic acid O O O O OH CH HO HO 3 HO CH2 O O Itaconic acid Levulinic acid 3-Hydroxybutyrolactone OH OH OH OH OH OH HO OH HO OH HO OH OH OH Glycerol Sorbitol Xylitol building sustainable supply chains NNFCC Fumaric & succinic acid downstream potential Polybutylene Fumaric Acid 1,4-Butanediol Terephthalate Copolyester Tetrahydrofuran Ethers L-aspartic acid Polytetramethylene Ether Glycol Unsaturated Polyester Solvent Thermoplastic Uses Polyurethanes Alkyd resins Spandex Fibres γ-Butyrolactone Paper sizing Pharmaceuticals Intermediates Food and beverages Herbicides Foundry Resins Printing Inks N-Vinyl- N-Methyl- 2-Pyrrolidone 2-Pyrrolidone 2-Pyrrolidone Animal Feed Extraction Solvent Pharmaceuticals Polyvinyl Polyaramids Cleaning Agents Intermediates Pyrrolidone Electronics building sustainable supply chains NNFCC Butanediol economics Bio-BDO Indifference Curve for EU (Assumes Sugar at Intervention Price) 500 Brazilian sugar - €150-200 400 Wet milling of wheat and corn is limited in 300 Europe with most sugar being sugar beet- Acetylene N-Butane derived. With a sugar beet price of circa 200 €30 per ton then on an integrated basis it may be possible to support captive fumaric