New Zealand Biofuels Roadmap Summary Growing a biofuelled New Zealand Report
Published by: Scion, 49 Sala Street, Private Bag 3020, Rotorua 3046, New Zealand www.scionresearch.com
The New Zealand Biofuels Roadmap Summary Report is available in digital format at www.scionresearch.com/nzbiofuelsroadmap
ISBN 978-0-473-42931-7 (print) ISBN 978-0-473-42932-4 (online)
© 2018 New Zealand Forest Research Institute Limited trading as Scion
Published February 2018 Acknowledgements
Stakeholder support
NZ BIOFUELS ROADMAP BIOFUELS NZ This study has been carried out with multiple stakeholders from the future biofuels value chain, who provided invaluable input during workshops, interviews and webinars. SCION
The authors of this report express their gratitude to the many stakeholders who generously contributed their time and expertise, including:
Air New Zealand Ministry for the Environment Bioenergy Association of New Zealand Ministry of Business, Innovation and Employment Bio-Protection Research Centre, Lincoln University Ministry of Transport Energy Efficiency and Conservation Motu Economic and Public Policy Research Authority National Energy Research Institute (NERI) Forest Owners Association Norske Skog Fulton Hogan NZ Post - Tukurau Aotearoa Interislander Oji Fibre Solutions KiwiRail Pure Advantage Lake Taupō Forest Management Ltd Sustainable Business Network Landcorp Farming Ltd Wood Processors and Manufacturers Ministry for Primary Industries Association of New Zealand Z Energy
Authors
Ian D Suckling, Ferran de Miguel Mercader, Juan J Monge, Steve J Wakelin, Peter W Hall and Paul J Bennett.
Editor
Peter Kerr
Contributors
The following Scion staff also made significant contributions to the study: Carel Bezuidenhout, Ginny Christians, Barbara Hock, Maia Ireland-Blake, Sandra Verlade and Suren Wijeyekoon.
Some or all of the contents of this document were produced based on the Energy Technologies Institute’s Bioenergy Value Chain Model (BVCM).
The BVCM mathematical formulation was extended by Drs Nouri Samsatli (Samsatli Solutions) and Sheila Samsatli (Department of Chemical Engineering, University of Bath).
Contents Foreword ...... Feedstocks and fuels ...... Summary ...... Where are feedstocks and How the New Zealand Biofuels fuels produced? ......
Roadmap study came about and Regional development ROADMAP BIOFUELS NZ what it means ...... opportunities ...... Findings from the New Zealand Infrastructure and services ...... SCION Biofuels Roadmap study ...... Fuel distribution ...... Next steps ...... Conversion plant size ...... Understanding the scale of the opportunity ...... Biofuels for New Zealand Greenhouse gas emission Why should New Zealand head reduction ...... towards a biofuelled future? ...... Cost of biofuels ...... What the rest of the world is Impact of co-products ...... doing in biofuel production ...... Results of modelling - Different Global research into future levels of biofuel substitution ...... liquid biofuels ...... Results of modelling - Choice Current biofuel production in of specific fuel types ...... New Zealand ...... Wastes, residuals and co-products ..... What the Biofuels Roadmap study set out to provide ...... The New Zealand Biofuels Additional considerations Roadmap study’s scope ...... What the scenario modelling Constraints, costs, assumptions results reveals - risks, costs and and technical understandings implications ...... built into the study ...... Technology ...... 8 Current liquid fuel use in Technical risk ...... New Zealand ...... Reducing the technical risk ...... Fuel uses ...... Feedstock ...... Greenhouse gas emissions Energy crop risk ...... from current fuel use ...... Land use considerations ...... Emissions Trading Scheme ...... Timing ...... Fuel costs ...... Competition for biomass ...... Biofuel value chain ...... Green biochemicals as another Alternatives to liquid fossil fuels ...... output ...... What are acceptable feedstocks? ..... Environmental and social Biofuel implementation barriers ...... implications ......
Study results Future narratives How the New Zealand Biofuels What considerations should we Roadmap study was carried out ...... make around biofuels? ...... A brief description of the Bioenergy Value Chain Model ...... Model assumptions ...... Way forward The complex links between Where the modelling and feedstocks, conversion stakeholder discussions lead us ...... technologies and final fuels ...... Discussion ...... Future fuel demand ...... Results of modelling – 30% Glossary ...... substitution ...... Appendix ......
SCION NZ BIOFUELS ROADMAP F Chief Scion Executive, Elder Julian Dr Innovation Employment. and of Business, Ministry the Fund by Scion’s from Investment Science supported Strategic been has study year two This adebate. such inform catalyse will and We study this hope implementation. scale to any large committing before outcomes achieving desired the to go about best how and Zealand New in should play decarbonising deployment role future biofuel the on consensus national eventually reach and a vigorously debate understand, to fully important evaluated. vitally is It fully to be would need unintended and intended consequences and economy Zealand New whole the on impacts significant here would have considered is very as such industry biofuels too, Clearly being considered. scale greenfield options alarge as well brownfields as envisage can and industry biofuels of anew of elements all study exhaustive an not here is information reported the We that recognise opportunities. biofuels Zealand New the around fact-based and open discussion an point for starting agreat is We study this believe in Zealand. New implementation to biofuels barriers and drivers stakeholder highlighting biofuels, on views into gained we insight an diverse engagement this Through grateful. which for I am extremely organisations, Māori others, and research companies, pulp paper and companies, forestry companies, energy andagencies, departments including government of stakeholders different ahost from input We sought have also t reduction UK’s the in playing emission is meeting gas prominent greenhouse the role bioenergy understand and to assess used successfully been previously had model use. This Zealand New Technologies for to make suitable it modification Institute‘s Value after Chain Model Bioenergy UK Energy using the conducted was modelling optimisation scenario quantitative chains. This supply Zealand New in future reduction emission gas greenhouse potential their and options conversion and feedstock cost looked lowest at the has and costs and efficiencies technology conversion and rates growth included feedstock This by industry. evaluated technically been also has which available using data publically analysis modelling extensive an We conducted sectors. specific benefiting than rather Zealand’ New ‘good the for options of to identify our guiding work this been principleThroughout has • • • • could look like here, example: for industry biofuels alarge-scale what Specifically, to understand in Roadmap wanted this we forestry. and bioproducts bioenergy, on work subsequent groups) have extensive also (and depth. Scion in implications some their and solutions potential international and regions and resource biomass technologies, by comparing future Zealand’sto New energy of bioenergy study*, contribution potential Zealand the evaluated New which for Options builds work This Scion’s on Zealand. to New suited areoptions best Bioenergy 2007-2009 products,” liquid and liquid what biofuel to investigate biofuel have we led astudy bioenergy sustainable to produce Zealand’s by growing New ability security energy and production energy renewable of one increase Scion’s “to with outcomes, Consistent core purpose four Zealand. to New pertinent are very Currently drivers three all development. economic rural and largely driven by three key strategic drivers: climate change, security/independence energy Internationally, GHG of emissions. our country’s been has 23% for deployment responsible oil being fossil world and of the parts in other deployment extensive their despite Zealand, in New fuels To to transportation minor contribution have date, avery made liquid biofuels argets, informing policy and legislation development on UK renewable energy. onUK renewable development legislation informing and policy argets, oreword What are the key considerations and implications in developing such an industry? in implications developing and key are industry? an the such What considerations apriority? as targeting should be we liquidWhich fuels could use? we to crops liquid fuels to currently convert availableWhat technologies currently could available grow them?What we couldwhere crops grow and we * www.scionresearch.com/bioenergyoptions
S and deployment around a shared biofuels strategy will need astute leadership. Both astute need will strategy biofuels around ashared deployment and cannot and would not happen spontaneously or on its own. Coordinated development or on its andwouldcannot spontaneously not happen economy However, Zealand into integration New and the production biofuel large-scale plan. national in astrategic implement components and major to initiate leadership strong into to come being without production biofuel significant difficult is for it required means investment and commitment forward-thinking, level of The Zealand. New for future abiofuelled market alone bring not will about The long-term strategy. best the as relations economy, Zealand New of the environment international and interest inbe the will biofuels as aviation and fuel fuel marine of diesel, production low-carbon domestic require The still liquid will fuels. aircraft shipsand trucks, as such transportation in particular. other, petrol for But demand reduce strongly more difficult to decarbonise will (electric of EVs use Increasing vehicles), transportation, private for particularly solution. of the only part are Biofuels emissions. gas greenhouse Zealand’s to solve not New lowerwill its need alone industry of development abiofuels the that show discussions and modelling The in place. components to develop impetus and long-term the all to put implementation planning and independence. fuel andprovide transport commitments (GHG) gas Zealand’s New to greenhouse meeting contribution make asubstantial Zealand, on based sustainably-produced feedstocks. are: report Summary this and study by revealed the keyThree messages output. to level achieve of biofuel apre-determined requirements investment and technologies processing biofuel locations, options, material least-cost crop the to outline asked was model the and constraints, different along with model, into were fed abioenergy fuels fossil for rates substitution biofuel Various possible fuels. liquidcountry’s transport of the proportion provide alarge way entirely an to new sustainably establishing of requirements practical the and requirements, investment and around technologies gone study, into Scion the thinking has the that considerations outlines report This study. the from steps next suggested and conclusions outlining key the messages, report ZealandNew Roadmap: Biofuels Growing abiofuelled Zealand New technical aless is examination. scenario and modelling supply chain, computer intensive and to distribution processing biofuels transport the within feedback and conversations stakeholder extensive on based was study This Zealand. New for option optimal environmentally and economic viable a could become biofuels how outlines that report atechnical produced and study Roadmap Biofuels Zealand New the undertaken has Scion Institute Research Crown warming. global to proven now to contribute fuels transport fossil for would substitute biofuels These ships. and aircraft vehicles, heavy power and biofuels, into gas low greenhouse process to materials grow plant to sustainably capacity and capability the has country This future. transport way to abiofuelled grow its can will, the has it if Zealand, New . We can do this. Credible large-scale biofuel production and use routes exist for New for exist routes use and production biofuel this. We Credible do can large-scale . . National, strategic and corporate leadership is required is leadership to build consensus corporate and abiofuel strategic National, . . The opportunity has major national and regional implications, but biofuels could biofuels but implications, regional and national major has opportunity The . ummary
SCION NZ BIOFUELS ROADMAP cities and regions will have to be involved as important parts of this picture, in a plan bought into by all. Wise government (with a small ‘g’) will be vital. NZ BIOFUELS ROADMAP BIOFUELS NZ What would happen if 30% of the liquid fuels we use were made from plants grown
SCION on non-arable land by 2050?
We would reduce greenhouse gas emissions by 5 million tonnes per year, which is equivalent to taking half the cars in the country off the road.
We would be more energy independent cutting our oil imports by 30%.
Regional economies would grow as we plant feedstocks to turn into fuels at nearby processing plants.
Our goods and services would continue to have access to international markets.
With a forest the size of the Taranaki region, and processing as many logs onshore as we currently export, we could make 2.3 billion litres of liquid fuels annually. This is more than enough to meet all the South Island’s needs for a year.
How the New Zealand Biofuels Roadmap study came about and what it means Biomaterials and forest research institute, Scion took the initiative to consult with stakeholders in the potential liquid transport biofuel value chain and build a shared view ROADMAP BIOFUELS NZ around possible scenarios if the country wants to pursue a biofuel, low greenhouse gas future. SCION
The Rotorua-based Crown Research Institute employed and adapted a bioenergy model previously used in the United Kingdom for New Zealand conditions. It asked the model to optimise the land use, crop requirements, processing and distribution requirements under different possible scenarios and constraints to show what would be required at a national and regional level to achieve certain levels of biofuel substitution for fossil-fuel derived transport fuels.
This modelling serves two very important functions: An underpinning logic and rationale for the conclusions and recommendations provided by this report. A means to further explore (if required) the consequences and requirements if New Zealand adopts a biofuel strategy and implementation.
Scion developed this robust and reusable tool on behalf of New Zealand to show how biofuels might be integrated into the nation’s transport fuel mix.
This summary report is a less-complicated version of the New Zealand Biofuels Roadmap Technical Report (technical report), which has a greater amount of explanation around the intensive modelling carried out to inform these conclusions. The technical report also acknowledges the sources of information used in the study. It is available at www.scionresearch.com/nzbiofuelsroadmap
New Zealand Inc, assuming it understands the ‘why’ of biofuels, now has a roadmap and pathway to comprehensively debate the how, who, where, what and when of feedstocks and processing - and the means to achieve different levels of greenhouse gas mitigation and transport fuel independence.
SCION NZ BIOFUELS ROADMAP F initiate large-scale production. large-scale initiate to occur. production biofuel to large-scale sufficient alone be not will Market forces are types being developed. fuel all multiple but targeting options fuels; marine and drop-in diesel, petrol, that perspective, what is being advocated is not too technically risky. technically nottoo is being advocated is what perspective, that From required the timeframes. within are expected technologies viable so development, rapid and research of global area an intense is it But technologies. other than developed 6. areTechnologies less non-food feedstocks producing from for drop-in biofuels longer-term attractive Zealand. New for opportunity non-arable on most look grown the to land, be forestry particularly feedstocks, are grown. feedstocks the to where close located would be generally plants conversion Biofuel Island. North central the and Coast growth. of required time trees. to grow such length the given - forests new are from to come quantities biomass significant if so particularly chains. ▪ ▪ other means. aviation, shipping through long-haul and are which difficult to decarbonise road freight, as such sectors for so particularly is This commitments. reduction gas greenhouse adoption. general and environment realistically, and into can, economy existence bring abiofuelled country ▪ ▪ ▪ ▪ ▪ ▪ ▪ Roadmap study Roadmap . Credible large-scale biofuel production and use pathways exist for New Zealand. The Zealand. New for exist pathways use and production biofuel Credible large-scale . . Government policy support will be required in the short to medium to term enable required be will short in the support policy Government . . The biofuels opportunity is large-scale. is opportunity biofuels The . . Drop-in fuels (hydrocarbons functionally equivalent to fossil fuels) non-food from to fossil equivalent functionally (hydrocarbons Drop-in fuels . employment and development economic regional provide strong can production Biofuel . . Biofuels could be a large to very large longer term answer to meeting New Zealand’s New to meeting longer large answer term to very alarge could be Biofuels . indings from the New Zealand Biofuels Zealand New the indings from
Pyrolysis followed by upgrading appears to be particularly attractive for producing for attractive particularly to be by upgrading followed appears Pyrolysis Biofuel production costs will fall as technologies and the new value chain mature. new the and technologies as fall will costs production Biofuel high. still risks are low technical too the and prices Currently, carbon and fuel fossil Stable long-term policies will be critical for required investment to occur. required for investment long-term critical be will policies Stable East are Northland, model by the predicted growing areas Prominent biomass have now made long-term amajor Decisions impact. is This levels. substitution fuel at high fossil especially Timing important, is value other on impact its value chain and whole the consider must solution Any raised. are issues multipleThere to address ways
N feedstocks and fuel needs. needs. fuel and feedstocks willow and in Zealand New to: particularly implementation biofuel large-scale and rapid for options required is work future to de-risk Further biofuels. future for needed supply of feedstock sustainable and to large provide the soon to start needs option, planting feedstock best the as are identified forests If conventional environment. Zealand’s develop and New regulatory biofuels of perception building create apositive wins, momentum, provide early to start biofuels to produce niche term opportunities to to continue explore short needs Zealand New value chain. be: to will this Critical developed. be must plan implementation an in is place, consensus national this Once on: Key are needed Zealand. decisions New in should play decarbonising deployment role future biofuel the on required is toLeadership now build consensus anational . Increase our knowledge on the growth and suitability of energy crops such as miscanthus as such crops of energy suitability and growth the on our knowledge Increase . . National leadership to coordinate leadership National implementation. . targeting. should we be biofuels specific which and families fuel Which . . Better understand the suitability of different conversion technologies to New Zealand to New technologies of conversion different suitability the understand Better . . Alignment of different stakeholders, taking ownership for delivering each part of the part each delivering for ownership taking of stakeholders, different Alignment . required, timeframe. in and what substitution level ofThe biofuel . . Develop new forestry options grown specifically for energy applications, and applications, energy for specifically options grown Develop forestry new . right’. done required ‘biofuels and buy-inNational trade-offs to the . production. biofuel for feedstocks and land Acceptable . . Strongly leveraging international. learnings and experience. of biomass. uses best The . ext steps ext
SCION NZ BIOFUELS ROADMAP Biofuels for New Zealand
carbon dioxide (COcarbon as atmosphere the enters in engines burned when which surface, to the carbon stored plant- oil underground bring crude ancient, fossil from derived However, fuels transport economy. Zealand New world and the drive Liquid fuels future? biofuelled a Why should New Zealand head towards commitments. these obligation to meet alegal moral and both has country The GHG of reduction. global part stated of country’s GHG this in order toabsorption meet and/or production to mitigate its legally pledge Zealand New binding These documents 2017.October 4 on agreement the ratified since by 30% over by 2030. has 2005 levels Zealand New to GHG reduce emissions committed has Zealand New Agreement, Paris of the part As emissions. GHG reducing in part its out to carry Zealand New way one is for of biofuels use and production The emissions. would lowering have use overall an this on of impact amajor carbon reducing in so 2015, GHG emissions Zealand’s of New domestic 23% about represented fuels of fossil combustion This 4.6 country’s of one the million inhabitants. every for 8.6aday to in 5litres equivalent consumed 2015, of liquid billion Zealand New litres fuels warming. to global reducing contribution the low-carbon, to be in burnt considered engine is an then crops’ growth, during these atmosphere the crops. CO forest or agricultural as such sources biological renewable sustainable from them to is produce liquid from fuels way to GHGOne reduce emissions levels. in sea arise and floods storms, droughts, more extreme causing patterns, weather temperature are affecting earth’s in the Increases warming. global driving is and coal) including (contributed 140 years fuels, to by burning past in fossil the risen sharply advantage. economic around and jobs particularly infrastructure, biofuel of the being core parts from boost asignificant receive will growth feedstock greatest for recommended regions The in many markets. to entry barriers of non-tariff risk the faces it production fuel low GHG transport demonstrated clearly has country this Unless fuels. transport move and to required GHG low-carbon footprint be agreatly reduced to show (e.g. services and of tourism) goods will exporters Zealand New that dictate will pressure in world market trade, agiven becomes sustainability likely increasingly is It as that, . . . . Being part of a global movement to lower greenhouse gas emissions gas to lower greenhouse movement aglobal of part Being International market pressure International International commitments Regional development Regional ). of CO concentration The and other greenhouse gases (GHG) gases greenhouse other and has captured from from captured
SCION NZ BIOFUELS ROADMAP SCION NZ BIOFUELS ROADMAP Biodiesel ethanol. generation first or conventional to referred as (from wheat), or corn starch (from sugar or sugarcane). generally is bioethanol Such as such edible carbohydrates by fermenting made is Most engines. in modified Bioethanol (22%) (4%). diesel renewable and (74% are bioethanol produced main liquidThe biofuels production), of global biodiesel Renewable diesel engines. compression existing in use for up to 7% typically diesel, fossil ester. with acid blended methyl be Can biofuel production biofuel What the of the rest world is doing in importance. of economic be also will production biofuel (and of development national The in wood-based international) competence hence billion$5 in 2015. almost totalling oil imports, from generate independence will future Growing abiofuelled build businesses. original other to onwhich also base economic have secure will regions another enterprise, commercial asustainable As years and now accounts for about 4% of fuel for transport in 2015. 4% transport for about for of fuel accounts now and years over steadily recent increased on-road for has World use, mostly production, liquid biofuel . Energy independence . Energy ▪ ▪ ▪
Normally, bioethanol is part of a petrol blend, though 100% bioethanol can be used be can 100% blend, bioethanol though of apetrol Normally, part is bioethanol Produced by reacting fats and waste oils with hydrogen. with oils waste and fats by reacting Produced Produced by reacting vegetable oils or animal fats with methanol to produce afatty to produce methanol with animal or fats oils vegetable by reacting Produced
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SCION NZ BIOFUELS ROADMAP SCION NZ BIOFUELS ROADMAP commit to a biofuelled transport future. transport to abiofuelled commit well-thought-through and begin Inc. can Zealand New which on base comprehensive and a for basis provide the report summary this and report technical the itself, model the to constrain decisions using and informed evidence, empirical on study the basing By would muchmore speculative. be Roadmap study Biofuels ofany the conclusions amodel, such with possible calculations repeatable and verifiable testable, the without But, over 2015 a35-year from to 2050. period outcomes to paint apicture of being asked is the it as especially complex, is modelling Such depending on what pathways were chosen. would what happen of calculating capable amodel to use was choices deployment of different implications the to and understand only wayThe clarity to provide future multiple questions. answering ‘what-if’ of consequences and rather, implications, but, in Zealand, impacts, New the gives it implemented should be of biofuels pathway how provide not asingle ‘best’ does study The could have Zealand. New in future role the and biofuels trade-offs benefits, the understand or to make choices communities government and information to businesses, enable to provide objective ameans is It environment. and economy fuels liquid transport of abiofuels implementation successful for necessary provide picture required amuchclearer is of what timescales in the to by Scion internally commissioned was Roadmap study Biofuels Zealand New The are to made proceed. decisions before understood well to be required needs types biofuel the and processing, growing and inwould made biomass be investment capital where, how and when planted to be wouldIn need what words, other pathway. abiofuels down goes it when and if mindset to have need apurposeful will required, is Zealand New systems linked and distribution into fuel plants, in manufacturing investment considerable with allied of land, areas onconsiderable crops, of biomass quantities large because is, That initiated. be can debate informed to 2050, say out that longer over the term, particularly biofuels to produce biomass using and only is It processing by having of picture growing, aclear implications of the larger-scale initiatives. However, develop or to which on decide base amuchmore to robust be needs there in country. this produced could be biofuels theoretically that have shown projects actual and desktop These years. 25 past over the proposed been often have in Zealand New production biofuel for prototypes scale small and idea the said, That society. to amore sustainable transitions country the as options other complement economy, Zealand’s of low-carbon New future will and only apart will be Biofuels provide to What the Biofuels Roadmap study out set was used. was
were: study this for of scope Out • • • on: focuses study The scope study’s The New Zealand Biofuels Roadmap Liquid fuel usage by type and application is seen in the following in diagram. the seen is application and by type usage Liquid fuel aviation and fuel. fuel marine diesel, petrol, as is use of liquid fuel majority vast The imports. total 10% billion of in NZ$5 almost or 2015, about were worth These oil refined fuels. and of amix crude as overseas from fuel liquid fossil of its 98% about imports Zealand New in Zealand New use liquidCurrent fuel following. the in outlined are inputs as applied main considerations of the some report, of summary this purposes For the Report Zealand New in provided is the explanation Roadmap Biofuels A more Technical thorough study built the into understandings technical Constraints, assumptions costs, and a separate more detailed and focussed study would required. be study focussed and more detailed aseparate Zealand, New for important are very opportunities these that While recognised is it ▪ ▪ ▪ narrowing down a broad range of options to find the best solutions for New Zealand New for solutions abroad range to best of find options down the narrowing and use, and deployment scale large feedstocks, sustainable from of liquidproduction biofuels
Predictions around New Zealand’s future fuel demand. Available demand. public information Zealand’s around fuel New Predictions future Novel and gaseous fuels that would that engines. require modified or new fuels gaseous Novel and Niche applications which could provide one-off opportunities in specific locations. in specific Niche which could applications provide opportunities one-off .
SCION NZ BIOFUELS ROADMAP SCION NZ BIOFUELS ROADMAP 480 in 2015. by trees) grew by 64% between 1990 and 2015. This totalled 56.4 million 56.4 CO totalled 2015. tonnes 1990 and This by trees) by 64% grew between CO less emissions (gross Zealand’sNew GHG emissions net use fuel current from emissions gas Greenhouse cars. in new could would difficult only that slowit used be and to be deploy abiofuel vehicles, being used many of and our imports industries assembly or vehicle manufacturing nation’sThe domestic no with and vehicle light old is standards, by fleet international were 2,662 in vehicles 2016. electric 4.0 million about in vehicles 2016. was Zealand’s fleet there New total comparison, For Fuel uses 2016 Employment and Innovation Business, of Ministry Source: Fuel type Petrol Marine fuel Diesel Aviation fuel Liquid in use Zealand New fuel (million in 2015, by type fuel litres) and application. 1,418 Other energy Aviation fuel 3,228 Marine fuel Diesel Petrol • 30% off-road (agriculture, forestry, • 70% transport domestic International -0.3• International billion litres -0.2 billion litres • Domestic -1.1• International billion litres 0.3 - litres billion • Domestic Type Application light vehicles light 98% for mainly transportation, in 31 fishing, construction, etc.) construction, fishing, New Zealand’s liquid transport fuel use fuel Zealand’sNew liquid transport 3,122 Commercial and public services Agriculture, forestry and fishing International transport Domestic transport Impact Passenger travel Passenger international trade by weight trade international Zealand’s of New 99.5% Moves • Regional travel by air arrive tourists all • Nearly 14% of exports carry • Aircraft linked economic to • Strongly transport • Commercial land and 22% of imports by value of imports 22% and performance Residential ₂ Industrial atmosphere of the out taken Application ₂ -e -e 1990. since 78% have increased in Zealand New emissions Road transport following diagram. 1990 in -2015 the from shown is (in particular) use fuel liquid from fossil emissions in GHG growth The sector, of emissions. 58% for account energy the liquid fuels Within agriculture. contributorlargest after second in the 2015, 40.5% for emissions responsible Zealand’s of New gross was Energy follows. are as of petrol price retail of graphically, the pump price. Represented components the actual of the only is part fuels fossil the of importing cost the that meaning petrol, of cost retail final half the make up levies Currently, and almost costs. taxes fuel Fossil Fuel costs units. emissions for low prices historically to date to owing use fuel transport on effect however,In little had practice, has ETS the units. emission trade to participants forestry ETS and allowing emitters obligations emitters, on compliance amarket-driven by creates placing units ETS emissions for The atmosphere. price the from CO the for growers to forest benefit afinancial provides also ETS The to emissions. reduce practices and in technologies to invest consumers and businesses for incentive financial creates onemissions aprice use. Putting fossil-fuel from emissions including carbon Zealand’s New Trading Emissions The (ETS) Scheme key reducing for the is emissions, tool TradingEmissions Scheme
Million tonnes CO₂-e 30 35 40 20 25 10 15 0 5 1990 New ZealandNew sector energy emissions by type. fuel Coal gas Natural Source: Ministry of Business, Innovation and Employment 2017 Employment and Innovation Business, of Ministry Source: 1995 2000 Fugitive Liquid fuels Year 2005 Biomass 2010 their trees remove remove trees their 2015
SCION NZ BIOFUELS ROADMAP SCION NZ BIOFUELS ROADMAP investment is required to begin biofuel production. Consequently most overseas biofuel overseas most Consequently production. required is biofuel to begin investment upfront capital In addition, asignificant deployment. to greater their barriers major the of one fuels; fossil than to produce are currently more costly Biofuels costs. Biofuel Petrol cost (dollars per litre) US/NZ the and exchange rate. dollar oil of crude include cost the cost influencing fuel final Major variables the fuel. of fossil cost Zealand New of indication the agood provides refined fuel of landed this cost The a refined product. as imported is at Refining quarter one NZ in Whangarei, almost processed oil crude imported from are produced in Zealand New used fuels of the While most purchase. they pump, directly at the services and either indirectlygoods or via cost, fuel to the sensitive are very consumers and are avolatile commodity fuels Fossil Price (dollars per litre) 0.80 0.00 0.60 0.20 2.00 0.40 1.80 1.00 1.60 1.20 1.40 0.00 0.50 2.00 2.50 1.00 1.50 Variation in the retail price since 2005. of and cost petrol landed petrol refined 2005 Retail price petrol breakdown (week beginning 17 Feb 2017). 2006 Biofuel price parity 2007 2008 Other costs Other 2009 2010 2011 Year Landed refined petrol cost petrol refined Landed Source: Ministry of Business, Innovation and Employment 2017 Employment and Innovation Business, of Ministry Source: 2012 Landed refined petrol cost petrol refined Landed ETS Distributer and retail margin levies and taxes Other GST 2013 2014 2015 2016 2017
Source: Ministry of Business, Innovation and Employment 2017 its own advantages, disadvantages, costs, market challenges opportunities. and costs, disadvantages, advantages, own its with -each scenarios many different but Zealand, New for ‘one not is There story’ biofuel interest. best long-term are that country’s notin the solutions of sub-optimal upon seizing create arisk price) of feedstock, manufacture, obtaining growing or the for options ease diverse and (differing in types demand, multiple options, conversion fuel and transport numerous of dozens feedstocks, of potential existence complex. The extremely is Zealand New valuefor chains biofuel future best the to options identify possible the all from Choosing biofuels. domestically-produced than rather imported use can distributor afuel and products, their to sell best where determine can growers choices, use land have are possible different There options. at stages different participants since -especially profitable to be value in chain needs the step adopted, to be every For biofuels in Zealand. New exist scale valueof chains No any such significant ship or plane. • and into biofuel, conversion • site, production to abiofuel feedstock of the transport and harvesting • product, waste a oras main product the as either feedstock, growing acrop abiomass to produce • include: These value chain requires interlocking different components. biofuel A future chain value Biofuel in to earnest. begin production allowingand biofuel fuels of fossil are to those equivalent of biofuels prices retail the -meaning incorporation of biofuel involve levels mandated or programmes government subsidies implementation the option.the on depending vary to implementation barriers the value chains, such are Within used. in vehicles they which the and are needed, they to where are distributed in they how also only not but of in production, their considered to terms be need also alternatives Such to ship. or rail trucks from as such to models more efficient freight switching and of public transport use greater vehicles, more efficient includes It system. Zealand’s New energy way to decarbonise best the be will ofA mix options to implementation. barriers and advantages own its Each has biofuels. gaseous and cell-powered vehicles hydrogen vehicles, fuel include for electric These fuels. fossil for replacements renewable possible as are in of a number There to options addition biofuels fuels fossil liquid to Alternatives distribution of the biofuel to the point of demand to be used to power the final vehicle, final the to power used to be point of to demand the biofuel of the distribution
SCION NZ BIOFUELS ROADMAP Energy Distribution Use production
Electric vehicles NZ BIOFUELS ROADMAP BIOFUELS NZ
SCION Drop-in fuels
Ethanol - blends below 10%
Ethanol - blends above 10%
Location and significance of barriers to implementation of different alternatives to fossil fuels. Larger dots represent bigger barriers.
Battery electric vehicles (EVs) ▪ Main barriers are the need for both completely new vehicles and a new charging infrastructure. ▪ However, largely renewable electricity is already produced and distributed at a large scale in New Zealand.
Drop-in biofuels ▪ A challenge to produce large volumes of biofuel at a competitive cost (i.e. the focus of this study). ▪ But once produced, biofuels can be blended into the existing fossil fuels and used in existing vehicles and distribution. ▪ Challenges in the availability of sustainable feedstocks, and the high risks in investing in production facilities (when the technologies are not mature and costs are high).
Ethanol ▪ While in use overseas, and able to be used in blends of up to 10% in most existing petrol engines, the barriers to implementation are mostly in producing the fuel at scale. ▪ Blends above 10% require significant upgrades to distribution infrastructure, and modified vehicles.
The best way to decarbonise the New Zealand transport sector will be application specific. EVs could replace a significant portion of New Zealand’s light vehicle fleet (passenger vehicles and light commercial vehicles). But it is much more difficult to see electricity replacing liquid fossil fuels in international aviation and shipping, at least out to 2050.
This study focuses on the production of liquid biofuels.
Biomethanol is not considered because of its toxicity, and gaseous biofuels such as biomethane or bio-dimethyl ether are excluded because they would require a new distribution network and vehicle modifications. Likewise hydrogen, a promising longer term option, has also been excluded from further consideration.
What are acceptable feedstocks? If large-scale production and consumption of biofuels is to take place in New Zealand, production in particular, will need to be ‘sustainable’.
Financial Zealand. role New within biofuels’ on exists Technical are high. costs Timing commercially proven. to yet be Zealand? New for suited are best overseas implementation for considered or being used options biofuel and are to identify: steps first Necessary fit-for-purpose biofuel deployment. a with experience and knowledge international this could leverage world. Zealand New of the parts in overcome in have ways other different challenges, been other and These, will that impacts/tradeoffs the and these in addressing change, role the of biofuels be climate of addressing into benefits required. the buy public must the footprint, environmental Social/environmental way, scale. at and alarge arable land to be used for growing biofuel feedstocks. growing biofuel for used to be land arable unwilling be and to trends allow would likely is followIt overseas Zealand New that in option study. an this excluded as are of feedstocks outcry. an Imports caused also has of biodiversity loss and carbon of emissions consequent and oil to palm production, of rainforest conversion The vigorously debated. production fuel for crops of food use the seen has issues security food and use land around best tensions shortages, food international But countries. by in government mandate many corn; and sugarcane encouraged as such crops food Global first-generation biofuel deployment initially used existing agricultural commodity in study. this consideration from highly is unlikely excluded lands is and acceptable, to be of our on crops conservation planting or forests, ornative lands Zealand’s New from conservation Using feedstocks are critical. choices feedstock the in cases, all But, notclear. still is time evolve with might this how and context, Zealand New in the biofuels’ ‘sustainable constitutes What The challenge of implementation include: but report, technical in the are discussed more fully barriers These overcome. to be need will barriers deployed, major to be some biofuels For large-scale barriers implementation Biofuel . Which of the huge number of feedstock, feedstock transport, conversion processes conversion transport, feedstock huge of Which the of number feedstock, . . What are the actual issues, barriers and risks going to be for biofuel implementation implementation going biofuel for to risks be and barriers issues, actual are the What . ▪ ▪ ▪ ▪ ▪
Scale, complexity and timeframes are daunting, no broad societal/political consensus consensus broad are no societal/political daunting, timeframes and complexity Scale, upfront investment and fuels, fossil than to produce are currently more costly Biofuels There is technical risk, particularly around biofuel conversion technologies that have that technologies conversion around biofuel particularly risk, technical is There For biofuels to have a significant role in reducing the New Zealand energy sector’s energy role to have in Zealand asignificant reducing New the For biofuels in value chain of to acoordinated the act require will parts introduction all Biofuel
SCION NZ BIOFUELS ROADMAP SCION NZ BIOFUELS ROADMAP scenarios to address these questions. these to address scenarios deployment biofuel of various modelling quantitative to use was study of the purpose The them? address to ways out to working aprecursor -as futures arange under of possible in Zealand New Decrease in production of BrazilianDecrease costs ethanol the as technology Production costs (US$ per cubic metre) respectively. 72%, and by 66% fell sugarcane from producing bioethanol for costs feedstock delivered and cost conversion the where 1975 from to 2004, in below Brazil are in illustrated price falls These over time. fuels fossil to relative should improve and competitiveness biofuel feedstocks new and technologies new for normal is learning’ ‘technology Such increases. experience commercial and are optimised technologies the over time, as drop substantially costs operating and capital both see will scale, technology, at commercial when A biofuel time with reduce will risk technical and costs Biofuel 1000 1500 500 0 1975 599 977 Feedstock (plant gate) 1980 1985 matures. 491 824 1990 Year Ethanol production Source: van den Wall Bake, et al. 2009 al. et Bake, Wall den van Source: 1995 244 465 2000 2004 157 298 Study results
SCION NZ BIOFUELS ROADMAP qualitative components of the project. of the components qualitative and quantitative the of both efforts combined the from are extracted report summary this and report technical in the presented steps next and conclusions results, The scenarios. shaping the and workshops interviews, in including involved participating entire in process, the were extensively Stakeholders valuable lessons and perspectives. provided deployment biofuel with experience global to implementing path the biofuels, down are further States, United the and Sweden including Brazil, many countries, As in Zealand. New implementation biofuel facing barriers potential and implications issues, the in detail to understand undertaken was study of the component qualitative A parallel effective. cost most the is technology what or grown, be could they where and used could be feedstocks which reduced, be muchwould by how GHG emissions as such questions answered ‘futures’. model The of specific implications and impacts the estimated model the questions, Using specific look might this like. of what create and future’ scenarios the at to ‘look were used techniques optimisation mathematical and modelling Quantitative carriedstudy was out How the New Zealand Biofuels Roadmap a planning horizon of seven 5-yeara planning horizon of seven 2016 from to 2050. periods with into cells, 50 x50 kilometre country BVCMthe of the version divides Zealand New The and populated it with New Zealand-specific data. requirements Zealand New for to BVCM make it suitable the it modified and licenced Scion Kingdom’s United the meeting targets. reduction GHG emission in prominent the role of bioenergy understand and to assess used successfully and Technologies (ETI) Energy by the developed BVCM Institute KingdomThe United in the was time. and over space options feasible to investigate selected Value (BVCM) Chain Model Bioenergy scratch. The from model was own create its than rather framework, modelling comprehensive study, this existing for an and chose Scion value chain in Zealand, New biofuels of the well-suited is to astudy model optimisation An data. of sources and references the all contains also which report, availableis in technical the inputs and parameters modelling to the background A muchmore explained thoroughly Model Chain A brief description of the Bioenergy Value current sawmills. current sawmills. chips and from current landfills from include waste municipal wood These model. Point source feedstocks. are replanted. forests these that assumes model The at current prices. forests plantation existing from purchased be can residues and Logs of grades different forests. Existing Zealand. New climate across and variations productivity for to account class land and cell onthe depending rate crop of estimated is each machinery. growth and yields The harvesting needs it because land steep on grown be cannot example, for canola land, willow. or onappropriate miscanthus only quality grown be Acrop as can such crops corn, energy and forests, energy dedicated conventional forests, include canola, These production. Crop use. land current under competing value of land the to reflect used is cost are excluded. opportunity land land non-productive Acell-specific other and bodies water land, urban estate, conservation The productivity. potential onits depending classes into land five classified is land productive the cell, each Within class. Land include: modelling to the Inputs Zealand. New relevant to be might a biofuelled that biofuels final and technologies conversion modes, transport includes a broad range model ofThe crops, potential feedstocks, of action. course of aparticular end-to-end elements the with associated impacts environmental and economic technical, the provides then It modelled. timeframe chain and value whole the across solution cost lowest the identifying pathways, biofuel potential many the among from chooses model defined, is the scenario or ‘future’ aspecific Once Cells and time in horizons the used BVCM to represent Zealand New spatially. 2016-2020 2021-2025 A range of crops can be grown as feedstocks for biofuel production. production. biofuel for feedstocks as grown be Arange of can crops Feedstocks available at specific locations are also included in the are also locations available at specific Feedstocks 2026-2030 2031-2035 2036-2040 2041-2045 2046-2050
SCION NZ BIOFUELS ROADMAP SCION NZ BIOFUELS ROADMAP from forest plantations, the potential pathways are shown in the following diagram. following in diagram. the are shown pathways potential the plantations, forest from fibre logs product, one uncountable. just For feedstock-to-biofuel are almost pathways potential the restrictions, these Even with gasification. for feedstock notas but biodiesel to produce used be oil can example, For pathways. completely canola different have feedstocks different and connections, to realistic restricted Each pathwayis modelling. of the complexity the demonstrate scenarios If?’ ‘What These fuel. afinal or arawpoint material, is start the -whether many moving parts analyse match and mix, BVCM must The model fuels final and technologies conversion feedstocks, complex links between The technical report. are built available in into the are also our modelling. These assumptions Many other • • sold, be can that of co-products amounts limit no is the on there and country the • over reduce time, will • considered, • • • • are: assumptions Key model assumptions Model report. technical in the discussion amore detailed and appendix in found the be can model in the considered technologies and feedstocks of the A list model. the for main parameters input of one is the produced to be needs that of amount biofuel The aviation or marine fuels. diesel, petrol, fossil for substitutes according as to use their types into fuel are classified These produced. be can Arange of biofuels final biofuels. Final intermediates. and feedstocks different the loadingfor transporting and costs as well as road and networks, rail ports, existing ship. or train includes model The (e.g. residues) intermediates and forest by road, from feedstocks pellets wood biomass Feedstock/intermediate transportation. immature for sources processes. scientific/industry or reputable information commercial experience from were obtained process and costs plant Conversion sizes. plant different among from choose also can model The produced. co-products and chemicals), costs, operating and capital (e.g. requirements resource additional or yields, production onfuel electricity data contains technology, each For model the to fuels. final feedstocks biomass different the technologies. Conversion imports or exports of biofuels are notallowed. of biofuels exports or imports value chain, of the and parts all rate for discount single 7% throughout cost same at are the available in unlimited inputs quantities non-feedstock of immature process commercially proven be costs will and technologies conversion all not is costs/prices on impact its and supply demand and between interaction the current on (2016) based prices co-product and values, costs input constant modelled, not distribution fuel planning value horizon, chain and whole the optimising across level model, national are included to convert technologies 20 More conversion than of moving the costs the calculates model The
Mild bio-oil upgrading upgrading Bio-oil depolymerisation when considering the entire value chain. the considering when possible solution cost information to this lowest provide all the balances model The Oxygenated Hydrothermal marine fuel liquefaction Biocrude Catalytic Pyrolysis Potential pathways for fibre logs from plantation forests. from logs fibre for pathways Potential Drop-in marine Hydropyrolysis Pyrolysis oil Drop-in Fibre logs jet hydrocarbons Direct sugars Direct torrefaction Pelletising and to Fibre logs Fibre Torrefied Drop-in pellets diesel wood fermentation Gasification/ Torrefaction Torrefied Drop-in petrol wood chips Gasification/ alcohols mixed Pelletising Biobutanol pellets Wood Fisher-Tropsch Gasification/ Bioethanol Chipping Wood chips Cellulosic butanol Cellulosic ethanol Alcohol to jet to
SCION NZ BIOFUELS ROADMAP SCION NZ BIOFUELS ROADMAP projections, and are described in report. technical the are and projections, described BEC2050’s The demand fuel credible provided boundary low scenarios highand use in Scion’s are used these and projections demand reliable modelling. future credible Council’s provided BEC2050However, recent and study Energy BusinessNZ the study’s this complex beyond is scope. and demand fuel future Predicting • travel, and towards to climate attitudes alter change might society’s -which changing attitudes • vehicles, of autonomous acceptance ships, to and rail trucks from freight • • technologies, • • • • • • include: of demand this Drivers production. biofuel large-scale for options considering when required vital is future in of the liquid fuels quantities and types The demand Future fuel and socio-political uncertainty socio-political and including climate change due to supply developments wars, chain disruptions global and social/demographicfuture connectivity urbanisation, digital as such changes of shifting -e.g. of public transport, use greater of transport modes to the changes government anddecision-making, policies battery hydrogen-fuelled as breakthrough or vehicles, such developments disruptive vehicles, powertrain uptake of electric availability, and price long-term alternatives, their future and in liquid trends fuels on-going gains efficiency in vehicles engines, and Zealand, New in outside and growth, economic growth, population The model finds the lowest cost solutionThe finds the cost model lowest by balancing multiple considerations. Time Technology Feedstock transport Land class Fuel type Fuel solution Lowest cost Point source and existing and feedstocks production forests Crop Space based on BEC2050based modelling. Actual 2015 consumption fuel volumes (crosses) are used New Zealand in 2050. Zealand New required be will in of liquid 6billionEven litres fuels low in almost scenario, the use (66%fleet in vehicle light of2050). EVs is the fleet into vehicle of light EVs the vehicle private penetration greater due to travel and reduced low scenario more the under use but scenarios, both under decreases demand Petrol or decreases. constant relatively either is diesel scenarios, both under to rise projected is demand Jet required significantly. changes scenario. However, of mix fuels the cases in both by approximately 30% lower in use the decrease and scenario, use liquid high in the fuel 2015 actual demand as same the Total to remain almost projected is demand 2050 fuel 2015 values. were kept figures at constant these use, fuel marine nor did BEC2050 include not the off-road diesel, for study applications Because as few restrictions as possible. as restrictions few as are highlevel implemented -with at arelatively biofuels when revealed issues the and to do chose it what to run see was model the scenario, arealistic While necessarily not to in in 0% climb 2020 2050. to from linearly set demand 30% of 2015was fuel minimum the where production level ascenario of biofuel with began modelling The Results of modelling – Fuel consumed (million litres per year) Future demand fuel projections for liquid in the fuels high and low scenarios use 3000 4000 2000 3500 2500 1000 1500 500 0 2010 2015 2020 as reference in later scenarios. reference as 2025 2030 Year 2035 % substitution % 2040 2045 2050 Marine Petrol Jet Diesel
SCION NZ BIOFUELS ROADMAP SCION NZ BIOFUELS ROADMAP 2030, 15 years after planting. 2030, after 15 years are only available after forests fibre and energy logs from 2045, only available after • and residues, forest and forests energy conventional forests, • • In used. case: this be can crops energy harvested mechanically- nor canola neither then used, be cannot land arable 2, where In Scenario lignocellulosic feedstocks. by pyrolysis/upgrading of amix drop-in diesel and and petrol canola of from biodiesel simple of acomparatively mix To selects model the options of possible all repeat, willow, residues. miscanthus, fibre logs forest and pyrolysis/upgrading through mainly diesel and petrol feedstocks, of lignocellulosic of amix drop-in and canola from are biodiesel produced 1,In main biofuels Scenario the fuels and Feedstocks unacceptable. also is of growing food capable usingunacceptable; land ethically production biofuel for crops only not that using is food decides Zealand New where asituation under would happen what to understand chosen was scenario second The willow or grown. like crops could be now miscanthus energy nor crops crops. This possible restricts feedstocks and to because wastes neither forestry food arable for unsuitable are only land on able grown to be feedstocks except that were modelled. options use Two class land different • • to: free model the leaving way to achieve target, this cost lowest ‘asked’ to the determine was model The i.e. with as few restrictions as possible. as i.e. restrictions few as with 30% biofuel substitution30% scenario relative to the total liquid demand fuel projections new conventional forests take 30 years to mature, so fibre logs from these forests are to forests mature, 30 take years fibre so these logs from forests conventional new new and of fibre volumes existing logs by larger from are crops replaced energy by more drop-in drop-in and replaced is petrol diesel, production biodiesel ▪ ▪ allow all feedstocks and all conversion technologies to be used. to be technologies conversion all and allow feedstocks all to produce, and biofuels which choose
Fuel consumed (million litres per year) Scenario 2 (No arable land) – where all other variables are held the same as Scenario Scenario as are same held the variables other 2(No all –where Scenario land) arable classes, land onall produced be can feedstocks –where 1(All classes) land Scenario 9000 6000 8000 3000 4000 5000 2000 7000 1000 0 2010 made under high and demand low fuel projections. 2015 Total 2015 consumption 2020 2025 2030 Year 2035 30% of 2015 of 30% consumption 2040 2045 2050 , The model chooses these options because they are the lowest overall cost.
Across time the biofuel production and feedstocks were as follows.
8 ROADMAP BIOFUELS NZ SCION 7
6
5
4
3
2
Feedstock used (million odt per year) 1
0
2016-20 2021-25 2026-30 2031-35 2036-40 2041-45 2046-50 2016-20 2021-25 2026-30 2031-35 2036-40 2041-45 2046-50 All land classes Non-arable land
Other Forest residues Canola seed Fibre log - new forests
Energy crops Fibre log - energy forests Fibre log - existing forests
Feedstocks used as a function of time in the two 30% substitution scenarios, Scenarios & (odt - oven dried tonnes).
2500
2000
1500
1000
500 Biofuels produced (million litres per year) per litres (million produced Biofuels
0
2016-20 2021-25 2026-30 2031-35 2036-40 2041-45 2046-50 2016-20 2021-25 2026-30 2031-35 2036-40 2041-45 2046-50 All land classes Non-arable land
Drop-in petrol Drop-in diesel Biodiesel
Biofuel production as a function of time in the two 30% substitution scenarios, Scenarios & .
SCION NZ BIOFUELS ROADMAP Maps showing feedstock consumed and for biofuelsMaps showing Scenario consumed produced feedstock all land classes) in the 2021-25 The period. of area in the dots this and the following maps is principally inNorthland,EastCoastandthecentral NorthIsland. increasing volumes ofwillow andmiscanthusare energy used.These crops are grown existing forests, particularly inthecentral NorthIslandare Inaddition, consumed. canolagrown across thecountry, particularly inNorthland. biofuel production plantsare located asafunctionoftimeforScenario The following showwhere maps andwhenthefeedstocks are produced andwhere the Where are feedstocks andfuelsproduced? EastCoastregion mature andbecomeimportantfeedstocks. ▪ ▪ ▪ Forests
Then, in subsequent periods,Then, insubsequent increasing volumes offibre logs andforest residues from In the2021-25 period only isproduced biodiesel inasingle Auckland plantnear using In thelastperiod, newconventional forests planted inthefirst period primarily inthe proportional to or thefinal amount consumed biofuel of produced. feedstock Energy crops Feedstock Canola seed Biodiesel Biofuel Drop-in petrol and diesel and petrol Drop-in (30% substitution, (30% . NZ BIOFUELS ROADMAP BIOFUELS NZ SCION
Feedstock Biofuel
Forests Energy crops Canola seed Biodiesel Drop-in petrol and diesel
Maps showing feedstock consumed and biofuels produced for Scenario (30% substitution, all land classes) in the 2026-30 period.
Feedstock Biofuel
Forests Energy crops Canola seed Biodiesel Drop-in petrol and diesel
Maps showing feedstock consumed and biofuels produced for Scenario (30% substitution, all land classes) in the 2031-35 period.
SCION NZ BIOFUELS ROADMAP Maps showing feedstock consumed and for biofuelsMaps showing Scenario consumed produced feedstock Maps showing feedstock consumed and forMaps showingbiofuels Scenario consumed produced feedstock Forests Forests Energy crops Energy crops Feedstock Feedstock all land classes) in the 2036-40 period. all land classes) in the 2041-45 period. Canola seed Canola seed Biodiesel Biodiesel Biofuel Biofuel Drop-in petrol and diesel and petrol Drop-in Drop-in petrol and diesel and petrol Drop-in (30% substitution, (30% (30% substitution, (30% NZ BIOFUELS ROADMAP BIOFUELS NZ SCION
Feedstock Biofuel
Forests Energy crops Canola seed Biodiesel Drop-in petrol and diesel
Maps showing feedstock consumed and biofuels produced for Scenario (30% substitution, all land classes) in the 2046-50 period.
The model choses to grow crops predominantly in areas such as Northland, East Coast/ Gisborne and the central North Island because these regions have lower land cost (dollars per hectare) and higher crop yields (tonnes per hectare). Crop yields are governed by climatic conditions, explaining why the model chooses to plant on lower priced land in the northern half of the North Island, rather than on lower priced land in the South Island.
Crops are generally planted on the lowest possible land class (i.e. on steep land rather than highly productive flat land) due to its lower cost.
The model tends to minimise biomass transport costs by locating conversion plants close to feedstock production. This is often in less-developed parts of the country.
Regional development opportunities
These scenarios represent major regional development opportunities. For example, for the Gisborne/East Coast region, Scenario 2 would result in an additional 75,220 hectares of new forest plantings, or approximately a 50% increase in the existing area of plantation forests. In addition, it would require construction of four new pyrolysis plants and four new bio-oil upgrading plants, requiring around $936 million in capital expenditure and creating over 1,000 new direct, indirect and induced jobs.
The land use choices made determine where the feedstocks are grown, as well as where the fuels are produced, so have a major effect on where regional development will occur.
The following maps illustrate how the land class choices made in Scenarios and influence where regional development occurs.
SCION NZ BIOFUELS ROADMAP Locations of biofuel production during 2046-2050 in Scenarios volume ofthe original biomass. ofshippingthefinalbiofuelismuchlessThe cost ofshippinganequivalent thanthecost production to ofconsumption. cities Trucks, coastalshipping andrail could cleverly be usedto move biofuelsfrom of places would make to sense usethis. fuelmarketersExisting fossil already have distribution asubstantial infrastructure, soit as Auckland. Island andEastCoastwould needto bedistributed to areas where thedemandis,such Biofuel mustalsobemoved to where itisneeded.Biofuelsproduced inthecentral North Fuel distribution on-site from biomassviagasification. • and Zealand hasdoneinthepast, • gas pipeline, • However, there are multiple possible ways to address including: suchissues, excludes theSouthIsland,EastCoastbeyond Gisborne, Wairarapa andpartsofNorthland. for processing. Suchnatural gas iscurrently only available where there isagas grid -which In particular, pyrolysis oilupgrading requires natural gas to generate thehydrogen required East Coast. roading andpopulation would support majornewprocessing plantsinregions suchasthe couldQuestions beraised over whethercurrent andinfrastructure services suchas Infrastructure andservices choosing conversionchoosing technologies that donotrequire natural gas, orproducing hydrogen extending andupgrading services infrastructure to locations these -somethingNew restricting thelocation(s) where conversion plantscanbebuiltto areas close to the All land classes Bubble isproportional to size the volumes produced. Non-arable land and and in the 2046-50 period. Conversion plant size
The cost of processing feedstocks into biofuels drops as the size of the conversion plant increases due to economies of scale. The cost of transporting the required volumes of biomass to the conversion plant rise as it becomes necessary to draw on biomass further away to meet demand. NZ BIOFUELS ROADMAP BIOFUELS NZ Consequently there is an optimal conversion plant size, depending on the specifics of SCION each feedstock/conversion process combination.
The modelling considers this trade-off, and for both biodiesel and pyrolysis plants it chooses the largest possible plant size - indicating that the lower capital and operation costs of the bigger plants per unit of output outweighs the increased cost of biomass transport.
Understanding the scale of the opportunity
The scale of the Scenario (30% of liquid fuels as biofuels, no arable land used) has a number of significant regional and national implications.
For the 2046-2050 time period, this would be equivalent to:
Existing forests: 3.0x area 280,00ha of Stewart New forests: Island 243,000ha
16.4 million 55 trucks tonnes per hour per year
7x 43 new New Zealand’s plants largest wood $6.8 billion processing plant
1.2x 2,313 million consumption litres per year of the South Island
SCION NZ BIOFUELS ROADMAP are reduced by 80% and 88% relative to the displaced fossil fuels. fossil displaced to the relative 88% and by 80% are reduced scenarios in both 30% substitution from below, table in emissions the average seen net As heat. for burned coal to replace used during is produced pyrolysis char the assumes model the because also but fuels, fossil displace biofuels mainly is This because increase. of biofuels amounts the as reduce GHG 2, emissions net Scenario 1and In Scenario both reduction emission gas Greenhouse scenarios would much more limited, be however.scenarios by 15% over in 2015 GHG both 2030 under GHG emissions reduction related The levels. in 2050 Zealand’s would New reduce energy- annual substitution biofuel cent per Thirty fossil fuels fossil displaced to relative reduction emission GHG CO Energy sector emissions sector Energy of 2015 2046-50 GHG percentage savings, fuels (kilogram CO (kilogram fuels Average relative emissions, to fossil displaced reduction in 2021-30 reduction (million CO tonnes Net displaced greenhouse gas emissions in displaced gas Net Scenario greenhouse substitution, (30% GHG emissions (million tonnes CO₂-e per year) -6.0 -8.0 -3.0 -5.0 -4.0 -2.0 -1.0 -7.0 3.0 0.0 2.0 1.0 GHG impact for the two two the for GHG impact 2016-20 Char displacing coal Emissions during biofuel production -e/L-e) 2021-25 no arable land). arable no 2026-30 % biofuel substitution scenarios scenarios substitution % biofuel -e) 2031-35 No restriction on restriction No 2036-40 Scenario land use land Net emissions Displaced fossil fuels 8 - . % % . 2041-45 Non-arable land 2046-50 Scenario 8 - . % . % Current projections show that between 2021 and 2030, New Zealand has a gap of 220 million tonnes of CO -e in our actual emissions versus Paris commitments. A cumulative reduction in emissions of 9-9.5 million tonnes is a step towards meeting these commitments.
The real potential for GHG reduction from biofuels is much more significant in the longer term. NZ BIOFUELS ROADMAP BIOFUELS NZ SCION Cost of biofuels
Levelised biofuel cost. To compare the relative costs of biofuel production across different scenarios, the levelised biofuel cost can be used.
This is an economic assessment of the average per litre cost of constructing and operating the whole value chain over the timeframe modelled (i.e. 2015 - 2050).
This type of analysis is widely used in the energy sector to compare different methods of energy production and takes into account: • initial plant investment, • cost of capital, • plant operating costs, • co-product revenues, and • all costs for feedstock production and transport.
Levelised biofuel cost ($/L-e) = Sum of (all costs - all revenues) discounted over lifetime modelled Sum of discounted biofuels delivered over the lifetime modelled
Biofuel relationship to fossil fuel price. For biofuel production to be profitable relative to fossil fuels in the absence of any other incentives, then their cost at the plant gate must be less than the sum of the landed cost of their fossil equivalents, plus any carbon price they would incur under the ETS.
The figure below makes this comparison for the two scenarios discussed above. This shows that Scenario 1 is profitable, whereas Scenario 2, where no arable land is used, is not profitable.
The following diagram shows that while neither scenario would be profitable at current fossil fuel prices, there are many circumstances where biofuels would be economic given the range of fuel prices seen in the last 10 years.
SCION NZ BIOFUELS ROADMAP can These production. biofuel to encourage overseas are commonly used incorporation of biofuel Equally, levels mandated or producers, to biofuel government incentives more likely of biofuel production profitable. to be make domestic the unsurprisingly, ETS, the within carbon for prices higher or prices, fuel fossil landed Higher and isindicated. diesel prices Key assumptions: constant nominal tonne per price of $25 against the levelised displaced fossil fuel costs. Note:against the levelised costs. displaced The and fuel mean fossil range of petrol fossil CO -e; an indicative profit to the biofuel producer of 10% constant of cost; nominal Comparison substitution of 30% levelised for the two biofuel cost scenarios Price (dollars per litre) 10-year average and landed for petrol fossil prices diesel; and constant 0.2 0.3 0.5 0.8 0.9 0.0 0.6 0.4 0.7 1.2 1.3 1.0 1.4 0.1 1.1 Profit All land classes Sources: Ministry of Business, Innovation and Employment & Hale and Twomey 2017. Twomey and &Hale Employment and Innovation Business, of Ministry Sources: Fuel type Marine (Heavy fuel oil) fuel Marine (Heavy Petrol Diesel Jet price parity input and prices co-product revenues. Levelised biofuel cost Biofuels Average landed fuel prices fuel Average landed Non-arable land 10-yr average (range) average 10-yr litre per cents Price 86.9 87.8 (38.3 –157.4) 84.4 (44.1 –130.8)84.4 72.0 ETS 10 average year Fossil fuels Levelised fossil fuel 10 low year 2017 February 10 mean year 10 high year make a big difference to the biofuel producer. For example, bioethanol and electric vehicles are currently exempt from contributions to the National Land Transport fund. A similar exemption for other types of biofuel would be a substantial incentive.
Impact of co-products NZ BIOFUELS ROADMAP BIOFUELS NZ
The sale of co-products has a significant beneficial impact on overall cost of biofuels, as SCION shown in the following table.
Impact of co-product revenues on the levelised biofuel cost for % substitution scenarios Scenario Co-products Levelised biofuel cost $/L-e Including co-products Excluding co-products Scenario • Canola seed meal All land classes • Glycerine • Char • Sawlogs • Fibre logs $. $ . Scenario • Char Non-arable land • Sawlogs $. $.
Results of modelling - Different levels of biofuel substitution The implications of different levels of biofuels substitution, 5%, 10%, 20%, 30% and 50% by 2050, were compared. This produced differing effects on feedstocks, production, cost and reduction of GHG emissions.
The model compared two situations - all land classes available and when no arable land can be used.
When all land classes are used and up to 50% substitution, the main biofuels are biodiesel from canola and drop-in petrol and drop-in diesel by pyrolysis/upgrading.
When no arable land is allowed, canola or energy crops (willow and miscanthus) cannot be grown and are substituted by additional existing feedstocks from new and existing forests.
The following graphs illustrate the different levels of biofuel substitution for different scenarios.
SCION NZ BIOFUELS ROADMAP always choose the lowest-cost value chains first. Here, this is mainly because at low Here, mainly is this lowest-cost because the valuefirst. chains choose always will model optimisation cost alowest such up because goes litre per cost levelised The used. is non-arable land when higher is and increases level of substitution the when increases of biofuels cost levelised the that figure and shows following table The Biofuel productionBiofuel in the 2046-50 for different period levels of substitution when all land Biofuels produced (million litres per year) in the used 2046-50 for different period Feedstocks levels of substitution when all land Feedstock used (million odt per year) Canola seed Other 3000 4000 2000 3500 2500 1000 1500 500 10 12 14 0 2 4 6 8 0 5 5 classes are available,classes and when no arable land isallowed. classes are available,classes and when no arable land isallowed. Drop-in jet 10 10 Forest residues Energy crops All land classes All land classes 20 20 Biodiesel Level of substitution (% 2015 of demand) substitution of Level Level of substitution (% 2015 of demand) substitution of Level 30 30 Fibre log - new forests -new log Fibre forests -energy log Fibre 50 50 Drop-in diesel 5 5 10 10 Non-arable land Non-arable land Drop-in petrol Drop-in Fibre log - existing forests -existing log Fibre 20 20 30 30 50 50 substitution levels co-product sales (particularly logs and rapeseed meal) are higher per litre of biofuel produced. The scenario where no arable land is used is more costly because while feedstock costs are lower, capital and operating costs are higher and co-product revenues are less. NZ BIOFUELS ROADMAP BIOFUELS NZ
1.2 SCION
1.0
0.8
0.6
0.4
0.2 Levelised biofuel cost (dollars per litre)
0 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Biofuel substitution level (% of 2015 consumption)
All land classes Non-arable land
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 0
-1
-e per year) -2 ₂
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Net GHG emissions (million tonnes CO tonnes (million emissions GHG Net -10 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Biofuel substitution level (% of 2015 consumption)
All land classes Non-arable land
Levelised biofuel cost and net displaced greenhouse gas emission at different substitution levels in 2046-50 period.
At 50% substitution, the model was forced to produce more costly diesel and even more expensive jet fuel. This is because conversion technologies like pyrolysis/upgrading produce fuels in specific ratios and once the demand for petrol (or diesel) in the fuel demand projection is met, then other more costly fuels must be produced. An assumption
SCION NZ BIOFUELS ROADMAP The higher the level of biofuel substitution, the greater the reduction in fossil GHG emissions. in fossil reduction the greater the substitution, level of the biofuel higher The used. to be technologies conversion have lower allowed cost of drop-in would petrol -exports are exported biofuels no that in made study this was shown below credit is only given for the targeted fuel type. fuel targeted the for only is credit below given shown In scenarios the of mix products. this sell would and so produce fuel, jet and diesel petrol, of drop-in mixtures produce actually drop-in technologies biofuel most because is This unlikely. is scenarios, in these In modelled is asingle reality, drop-in as targeting biofuel, fuels. of other proportions Tropsch, larger and of fuel jet only proportion make asmall gasification/Fischer- as such technologies, technology. Other costly very is This fuel. jet to in rich this amix drop-in convert and first, to is make ethanol of fuel this proportions only the to option make high because results highcost specified, is biofuel jet When used. be must technologies more expensive and system the removed from is flexibility specified, is fuel one When mixture. any fuel as volumeequivalent of biofuels Targeting producing an than more is expensive minimum fuels of specific volumes aviation the sector. decarbonising for options few of one is the example, bio-jet fuel For types. fuel fossil specific for replacements to target better Strategically, be might it petrol and diesel. fossil for of amix always replacements nearly was This cost. required at lowest demand to to satisfy produce biofuels which to choose free model the left preceding scenarios The types fuel Results of modelling -Choice of specific Substitution level % % % % % % Cost metrics and GHG reductions for different levels of substitution of levels different for GHG reductions and metrics Cost Levelised biofuels cost biofuels Levelised All land All classes Dollars per litre per Dollars . . . . . equivalent Non-arable land . . . . . Total investment capital over the seven periods All land All classes (not discounted) . Billion dollars . . . . Non-arable land . . . . . reduction in the period in the reduction All land All classes Net GHG emission GHG Net - - - - - CO Million tonnes Million . . . . . 2046-50 -e per year year per -e Non-arable land - - - - - . . . . . Production, % of demand of biofuels targeting specific fuel families Conversion technologies Main biofuels Levelised biofuel Fuel type (non-arable land) produced cost, $/L-e All land Non-arable classes land NZ BIOFUELS ROADMAP BIOFUELS NZ Any fuel • Pyrolysis/upgrading • Drop-in petrol
• Drop-in diesel . . SCION Petrol • Gasification/syngas fermentation • Cellulosic ethanol • Bioethanol • Cellulosic butanol • Biobutanol . . Diesel • Catalytic depolymerisation • Drop-in diesel • Biodiesel production • Biodiesel . . Aviation • Alcohol-to-jet • Gasification/syngas fermentation • Cellulosic ethanol • Drop-in jet . . Marine • Pyrolysis-mild upgrading • Oxygenated marine fuel . .
2.5
2.0
1.5
1.0
0.5 Levelised biofuels cost (dollars per litre-e)
0.0 Any fuel Petrol Diesel Jet Marine Any fuel Petrol Diesel Jet Marine All land classes Non-arable land
Levelised biofuel cost for production of 10% of 2015 demand as specific fuel types when all land classes are available, and when no arable land is allowed.
Wastes, residuals and by-products Current biomass wastes and process residues could be good initial biofuel feedstocks.
Municipal solid waste, waste wood from construction and demolition, harvest residues left in forests, and co-products from existing biomass processing such as chips from sawmills, or tallow from meat-processing are examples.
SCION NZ BIOFUELS ROADMAP * Organic part only ** Currently disposed in landfills Currently only disposed ** * Organic part biofuels. to produce by-products and of residuals potential maximum the shows following table The of lower their cost. because above discussed modelling scenario the in feedstocks as waste wood and residues forest to use chooses frequently model The residues. forest as such feedstocks • and costly, too them making often values, established and uses end have already existing • demand, of 8% 2015 fuel • because: production biofuel however,Generally large-scale limited is for potential feedstock their Municipal solid waste* waste* solid Municipal Forest residues Forest Waste wood** Tallow it might not be technically or economically feasible to collect geographically dispersed geographically to collect feasible economically or technically be not might it chips sawmill or are currently not tallow being used, residues and wastes while some up at making most demand, fuel total areavailable low volumes to expected compared Maximum potential of residuals and by-products and residuals of potential Maximum (oven dry tonnes per tonnes (oven dry Amount produced Amount year, 2015) , , , , , Substitution potential Substitution (% of total 2015 liquid (% total of Total Total fuel demand) fuel . . . . . Additional considerations
SCION NZ BIOFUELS ROADMAP plan for biofuel manufacture and use. and manufacture biofuel for plan into any factored and understood to be needs pathways potential of various cost and distribution (100%) atotal processing, or feasibility, feedstocks, timing, the substitution, (5%, fuels, 10%, 50%) 30%, 20%, of fossil apartial from examined substitution Whether system. integrated an of parts other from in nothing isolation changes everything, affects line. the down Everything up orfurther further value chain impacts biofuel of the change in component one A small considered. to be need production large-scale behind implications social and environmental economic, the sources, fuel in low pursuing carbon of opportunity While arichness is there issues. numerous raises in Zealand New deployment biofuel future for pathways potential Modelling implications and costs risks, - reveal What the scenario modelling results sustainable fuels. sustainable of more environmentally deployment immature encourage and with technologies risk to the reduce amechanism as overseas used widely been has support Government are at arange of level. development study in are evaluated this commercially proven. technologies technologies The as time with fall investor. an for risk add to the substantially However, risks technical Such will risk such standards. quality required fuel meet that fuels to and produce proven reliably scale to operate at large to be need will they occur can technologies new of these deployment large-scale Before options. best model’s of one the as including pyrolysis/upgrading, feedstocks, lignocellulosic identified from production fuel drop-in for so are commercially proven. yet not of particularly interest is This technologies internationally, are occurring developments rapid Although biofuel many of the Technical risk Technology competitive cost. competitive reliably, on-spec produce fuels, thatis it must at large scale and biofuel commercial production process asuccessful for The key Multiple technologies to produce drop-in biofuels are under active development, reducing the risk of finding a commercially-viable technology.
The following diagram summarises the readiness of most of the conversion technologies considered in the scenario modelling, many of which have yet to have been proven at commercial scale. NZ BIOFUELS ROADMAP BIOFUELS NZ
Pyrolysis coupled with bio-oil upgrading to produce a mix of drop-in petrol and diesel SCION is a prominent technology identified in many of the study’s scenarios because of its low cost. While pyrolysis is relatively well-proven with a number of commercial-scale plants operating, upgrading of pyrolysis oil has only been demonstrated at a pilot scale.
Research Prototype Demonstration Ready for commercialisation
Cellulosic butanol Conventional butanol Biodiesel
Direct sugars to hydrocarbons Hydrotreating
Aqueous phase reforming Cellulosic ethanol Conventional ethanol
Hydrothermal liquefaction Pyrolysis Source: International Renewable Energy Agency 2016 Agency Energy Renewable International Source:
Bio-oil upgrading
Hydropyrolysis
Catalytic depolymerisation Gasification/fermentation
Gasification/Fischer-Tropsch
Gasification/mixed alcohols
Alcohol to jet
Risk lowered
Commercialisation status of various biofuel production technologies use in the study. The colours represent mature processes (green), process proceeding via sugar intermediates (purple), bio-oils (orange), synthesis gas (light blue) or alcohols (dark blue).
Implications of using only mature technologies
Technical risk could be reduced by deploying only todays mature conversion technologies. A scenario run assuming 30% fuel substitution using only today’s mature technologies identified biodiesel from canola plus a little tallow, and ethanol from sugar beet as the sole fuels.
However, there are a number of significant negative implications with this scenario, including: • biofuel cost is considerably higher, $1.02 vs $0.77/L-e, • new vehicles with modified engines would be required, • a total of 825,000 hectares of cropping land would be required to grow the canola and sugar beet, 1.7 times the current cropping plus horticultural land in New Zealand, and
SCION NZ BIOFUELS ROADMAP Management. • and Scheme, • • include: currently These appealing. more feedstocks growing biofuel for make case the may also policies environmental Other alternatives. use land profitable offering would lift, demand feedstock increases, demand If biofuel cattle. and to sheep alternatives more profitable for looking have been Northland and Coast East of the lands flat and inexpensive relatively in the owners land Forexample, challenges. drystock economic experiencing uses land established with to compete feedstocks biofuel for opportunities are large There current in now, market. the beingnot grown profitable sufficiently not is it crop is agiven if that follows It great. too not risk the returns are and the if higher crops to more lucrative switch will farmers and dynamic relatively is use land Zealand New use considerationsLand country. the across at scale grown could crops be these successfully how on experience information and further to obtain would prudent it be feedstocks, potential Being risk. financial and technical substantial would so carry and Zealand, in New scale at large willow or grown have been not miscanthus as such crops Energy risk crop Energy Feedstock at scale? this products these for Would markets be there costs. • Some of the key timing considerations are illustrated on the following page. the on key of the are timingSome illustrated considerations co-ordination becomes. this quicker are implemented, more they critical the the or deployment, level of the biofuel higher to this. The crucial is leadership National scale. value chain at large the requires across coordinated deployment implementation Biofuel Timing critical. is Timing sales of co-products, particularly canola meal and sugar beet pulp are assumed to offset pulp are assumed beet sugar and meal canola particularly of co-products, sales reducing freshwater nutrient loads - National Policy Statement for Freshwater for Statement loads Policy -National nutrient reducing freshwater Grant -Erosion Funding erosion Control Afforestation and decreasing Programme to mitigate climate change –ETS, attempts Key timing considerations in biofuel deployment Feedstock production and transport Conversion plants Fuel distribution and use • Time for crop/forest to • Consents and finance for • Fuel demand changes grow plants • Upgrading of fuel • Learning to grow new • Construction time for distribution ROADMAP BIOFUELS NZ
crops plant • Fuel certification (e.g for SCION • Expanding crop • Infrastructure upgrades bio-jet) production • Time to commission plant • Rate new vehicles enter • Time for new technologies market (if modified to be commercially proven engines required) (uncertain)
If New Zealand wants to implement biofuel production as quickly as possible, the time required to construct the conversion plants will likely limit the rate at which biofuels could be deployed.
That would mean choosing mature technologies and a crop like canola that is already grown in New Zealand, matures quickly and could be upscaled rapidly. Likewise, the use of tallow as a biofuel feedstock is well understood.
While forest residues and fibre logs from existing plantation forests or biomass wastes are available immediately, their conversion technologies are not yet commercially proven.
This would limit the ability of biofuels to contribute to meeting 2030 GHG commitments.
In the longer term, beyond 2030, deployment is likely to be limited by feedstock availability, particularly if forestry feedstocks are the preferred option. The required conversion technologies would be expected to mature within this timeframe.
Forestry feedstocks also offer timing flexibility because they can be harvested at a range of ages to match demand. They can also be grown in different ways - for energy production on a 15 year rotation, or 25 to 30 years for a conventional forest producing sawlogs, fibre logs and forest residues.
They can also be grown in different ways, not only for 25 to 30 years for a conventional radiata pine plantation forest producing sawlogs, fibre logs and forest residues, but also potentially for shorter times as a purpose-grown energy forests using different regimes or species.
The modelling identified that growing lignocellulosic crops, such as miscanthus, willow or energy forests, in the early years and then switching to fibre logs from new multi-purpose forests in later years would get around feedstock constraints.
The impact of timing on biofuel implementation from different crops is illustrated on the following page.
SCION NZ BIOFUELS ROADMAP The following diagram illustrates some of the multiple options for biomass utilisation. multiple of the biomass for some options illustrates following diagram The factors. environmental and economic, social intoconsidered, taking balance could be biomass for uses best the that wouldIt leadership only national under be over long distances. feedstocks such to transport noteconomic is it generally would level, at have aregional because considered to be competition this And of biomass. uses best the or costs, feedstock on of supply demand impact and the f likely is of biomass price the on to have biomass for impacts Future competition of biomass. use competing future potential another is industries other and chemicals plastics, global in the use and export for biochemicals of sustainable naturally produced Production this for biomass. competition increase would which emissions, to Zealand’s implement to New option reduce carbon easier and attractive an is heat industrial for waste wood with gas and coal fossil Replacing exporters. and employers are regional major These industries. paper, include pulp and pellet the wood fibreboard and users particleboard, Existing of biomass. users future and existing would have with to compete feedstock Biofuel biomass for Competition to consider of study this scope the beyond is it question, While important an eedstocks. forests Existing technology mature Build plant forests energy New Miscanthus technology new Build plant forests conventional New Canola Conversion technology matures Consents and finance The impact of timing on biofuel implementation, now. assuming we start 2020 2024 2028 Growing crop Growing Construction of biofuel plant 2032 Year 2036 2040 and transport to grow, harvest Learn 2044 2048 Sawlogs Export logs Sawmilling Pulp and paper, medium Sawmill chips density fibreboard NZ BIOFUELS ROADMAP BIOFUELS NZ Fibre logs SCION
Wood processing Biofuels Biochemicals residues
Forest residues
Miscanthus, Wood pellets willow
Industrial heat
Competing uses of biomass (residuals are available in limited volumes).
Green biochemicals as another output
The model was not specifically programmed to produce or reveal green chemicals that could be obtained as additional co-products of the biofuels programme.
However, it is clear that sustainable chemicals for use in the plastics and other industries will be increasingly in demand as fossil fuel use decreases across the world.
These green chemicals could be expected to add significant bottom line advantages to the modelling and its economics.
Environmental and social implications Large-scale biofuel production would have significant positive environmental and social impacts, but there are issues that need to be considered.
Under a ‘biofuels done right’ policy, pathways selected for the production of biofuels should have demonstrable and significant carbon benefits compared to fossil fuels.
Crop production areas might need to be restricted to minimise the use of water for irrigation, and the spread of crops into areas of high conservation or amenity value halted.
The general public would have to buy into the benefits of addressing climate change and the ability of biofuels to achieve these benefits. The public would also have to understand and accept the possible risks and implications of biofuel production, such as the growing of monocultures on large areas of land.
Future narratives
What considerations should we make around biofuels? Predicting the future is a difficult enough challenge even looking only a year ahead. NZ BIOFUELS ROADMAP BIOFUELS NZ When the time frame is 35 years, the permutations and combinations become even more daunting. SCION
However, decision-makers need to consider possibilities and impacts to enable the development of the ‘best fit’ biofuel deployment pathways.
‘Future Narratives’ templates can help inform these decisions around the ‘right’ biofuel strategy for New Zealand.
The following five narratives provide a basis for government, industry and communities (including project stakeholders) to explore biofuel opportunities, issues and trade-offs.
. Meeting New Zealand’s Paris commitments
New Zealand decides it must implement large-scale biofuel production and use to help fulfil its commitment to meeting its 2030 GHG emission target of 57.7 million tonnes CO-e per year.
To achieve this ▪ Biofuel production is focussed on reducing national emissions, so targeting domestically-consumed fossil transport fuels, rather than those used internationally (which are outside the ETS framework). ▪ Mature conversion technologies would likely be chosen, at least initially, as a way of ensuring these biofuels are actually produced, and to reduce the technical risks of less-mature conversion technologies. ▪ Feedstock choices would likely be dictated by the available conversion technologies.
Likely biofuels ▪ Biodiesel or renewable diesel produced from canola (and tallow). ▪ Bioethanol from sugar beet and/or corn.
Impacts and consequences ▪ Feedstocks would need to be grown on cropping land. Would lead to a major expansion on flatter land spread across the country; with possible impacts on the existing dairy sector. ▪ Neither biodiesel nor bioethanol are drop-in fuels. The levels to which these biofuels can be deployed may be limited to the extent they can be blended with fossil petrol or diesel and still operate in the existing vehicle fleet. Production of more costly renewable diesel from canola oil could allow blend limits to be overcome. ▪ This may not be an optimal long-term solution. Food feedstocks may not remain acceptable feedstocks and higher levels of deployment would require vehicle fleet modifications, possibly making it difficult to meet 2050 targets due to technology and feedstock lock-in.
. Biofuels from non-arable land
New Zealand decides that food or energy crops grown on land capable of producing food crops are not acceptable feedstocks for biofuel production.
SCION NZ BIOFUELS ROADMAP and stay there for a significant length of time. length asignificant for there stay and located. plants conversion and are grown amount of existing low-cost waste. low-cost of amount existing
solutions will probably eventually be found. probably eventually will be solutions so interest, of global area an intense is this problematic. But, investment making concern for forestry feedstocks because the time to grow a crop to maturity is long. is to time grow acrop the to maturity because feedstocks forestry for concern of is particular This supply of feedstock. asustainable without build plants conversion not will while market, investors aguaranteed to growing acrop commit without wastes. and Likely biofuels Island. North Central the and Coast East the Northland, as such cheaper is land where feedstocks would probably mostly come from existing and future plantation forests. plantation future and existing from come would probably mostly feedstocks consequences and Impacts Likely biofuels are profitable. are low biofuels and risks To this achieve alternatives. over are fossil and to notprepared pay price on apremium biofuels for based decisions make implementation. Fuel users approach to biofuels ahands-off takes Government sites. some on restricted forestry may see land modification. engine requiring without achieved substitution consequences and Impacts To this achieve To this achieve aviation and marine in sectors. the implementation biofuel drives use fuel fossil (tourism about in particular) services and goods Zealand of New consumers from world, the across market and pressure increasingly important becomes Sustainability the required feedstocks - with resulting market price responses. . Leave it to the market to. Leave the it . International market pressure . International ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪
Conversion plant investments unlikely until oil and/or investments substantially plant rise Conversion prices carbon feedstocks in where regions occurs growth Economic employment and development First investments are built around specific opportunities such as utilising the limited the utilising as such are opportunities built around specific investments First Could potentially lead to competition for feedstocks from existing wood processors. wood existing from feedstocks for leadCould potentially to competition Technologies for producing drop-in fuels from lignocellulosic feedstocks are immatureTechnologies - feedstocks lignocellulosic from producing for drop-in fuels There is a risk that nothing happens until it is too late. Feedstock producers will not will producers late. too is until Feedstock it nothing that happens arisk is There forests plantation future and would existing likely originate from mostly Feedstocks New forests likely to be grown on steeper land incapable of mainly growing crops, incapable land likely steeper on grown to be forests New As biofuels from food crops or arable land would acceptable, probably be not land arable or crops food from biofuels As timingLevel and of would uncertain. any be deployment Decided on a case-by-case basis. technical the would when only invest producers feedstock and producers Biofuel steep on forests harvesting flow after debris and loss sediment that arisk is There of highlevels and by biofuels, Potentially, replaced could be families fuel all feedstocks. forestry from largely produced of drop-in fuels Mixtures It could be difficult to impossible for the country to meet its GHG reduction targets. GHG reduction its to meet country the for difficult couldIt be to impossible If biofuel demand rises rapidly, the rate of deployment may be limited by access to rapidly, rises demand limited may by access be rate of deployment If the biofuel ▪ Biofuels to replace fossil marine and aviation fuels would be a priority. ▪ New forests on steeper land, particularly in Northland, the East Coast and the Central North Island.
Likely biofuels ▪ Technologies producing drop-in fuels, particularly jet and marine replacements, largely from forestry feedstocks. ROADMAP BIOFUELS NZ SCION Impacts and consequences ▪ Since marine and aviation fuel markets are global, such biofuels would need to fit with international developments, regulations and standards as they emerge. ▪ It might not happen if New Zealand biofuel producers target domestic road transport over international markets. Carbon emissions from fuels burnt outside New Zealand currently sit outside the ETS, so mechanisms to meet national emissions targets may provide a price premium for biofuels targeting domestic emissions.
. Carbon zero by 2050
New Zealand decides there will be zero net carbon emissions by 2050.
To achieve this ▪ Fossil fuels must be replaced in nearly all applications. ▪ Electric vehicles and biofuels both need to be a significant component of the transportation energy mix. ▪ Long-term buy-in and commitment by government, industry and the public is required. ▪ Leadership is needed to plan and coordinate such a large-scale biofuel deployment. ▪ Long term stable government policies are essential to provide investment certainty.
Likely biofuels ▪ Drop-in biofuels from lignocellulosic biomass, produced by multiple technologies depending on local conditions. ▪ A focus on biofuels in the difficult-to-electrify transport modes of aviation, marine and heavy transport - although some bio-petrol is still required.
Impacts and consequences ▪ Afforestation and/or carbon capture from biofuel plants is used to compensate agricultural emissions. ▪ This is a large-scale undertaking with many significant social, land use and economic implications. ▪ Only lignocellulosic feedstocks are used to prevent lock-in situation. ▪ New Zealand leads global implementation of lignocellulosic biofuels.
Way forward
Where the modelling and stakeholder discussions lead us The preceding scenarios demonstrate that credible routes exist for large-scale biofuel production and consumption in New Zealand. Biofuel use could also significantly reduce ROADMAP BIOFUELS NZ New Zealand’s GHG emissions and underpin regional economic development. SCION These future-possible scenarios have narrowed down New Zealand’s best options, and provide a basis for government, industry and communities (including project stakeholders) to explore the opportunities, issues and trade-offs associated with large-scale biofuel production and use.
Given the right strategic drivers, national consensus is needed on the answers to four key questions in order to pinpoint the best option(s) for biofuel deployment in New Zealand. . Which fuel families and which specific biofuels should we be targeting? . What are acceptable feedstocks for biofuel production? . What level of biofuel substitution is required and in what timeframe? . What are the best uses of biomass in New Zealand?
Discussion
Scenario modelling, international trends and stakeholder feedback suggests the following key areas for New Zealand to focus on.
. Produce liquid biofuels to replace fossil fuels where there are few decarbonisation options
The best option to replace fossil fuels depends on the needs of the specific fuel sectors.
Battery-electric vehicles (EVs) are promising, particularly in urban settings. Travel distances are short, and the vehicles often sit idle so the recharge time is less critical. EVs also improve air quality and reduce noise.
EVs would reduce petrol demand in the first instance.
EV use may gradually spread to other sectors powered primarily by fossil diesel such as light trucks, long distance road haulage and off-road applications such as agricultural and forestry machinery. But because of distances travelled and loads transported with the associated demands on batteries, early electrification of these markets is less likely.
The high energy density of liquid fuels are well suited to applications in remote locations where fuel consumption is high, vehicles operate for a long time and battery weight would reduce payloads.
In some situations electrification of heavy duty vehicles may make sense - such as city buses, rail, city ferries and light trucks which return to base at frequent intervals.
Biofuels are currently the only real option to significantly decarbonise aviation, and even though alternative clean propulsion techniques are in development, these alternatives are unlikely to be ready for commercial use in 2050. Aircraft also have a long life span and are very expensive, so airlines typically want to use them as long as possible before replacing them.
In the marine sector, biofuels are one of the few options for decarbonising without installing new engines, particularly for large vessels such as container ships that export New Zealand’s goods.
SCION NZ BIOFUELS ROADMAP and what they are used for. are used they what and are harvested they are when grown, around they how flexibility significant offer also They non-arable are crops lower profitable for one of few land. the quality forests Plantation in Zealand. New of biofuels production large-scale for option best are the residues ashort-term could play role, logs forest and but feedstocks agricultural and Wastes option production feedstocks become available. required until option an couldthe of be forestry This volumes harvested. mechanically to be need they willow or require as land arable miscanthus as such crops lignocellulosic But feedstocks. biofuel for Lower-cost best would non-arable be therefore land dairying). for currently being used land of (this the crops excludegrowing food most would also of by avoiding capable market risk using or crops to future land reduce prudent food be would it production, biofuel long-term in the Given large-scale nature of investments them. buy in they way before a‘sustainable’ being produced are they convinced to be require will consumers in Zealand New use biofuel Large-scale vehicles. new for need limitedcould by the be ultimate their but deployment in Zealand, New available inalready limited quantities are proven use. They overseas, biofuel short-term Zealand New to increase options could offer respectively diesel and in blends petrol as added biodiesel, and Ethanol global aviation and maritime fleets. of part only is asmall Zealand New and non-drop viable arethere in few alternatives, shipping international for compelling aviation and where are particularly benefits These levels. in increasing gradually introduced to be biofuel the for and used, tovehicles be existing and infrastructure distribution fuel fossil particular, existing the allow both they In Zealand. New for advantages substantial offer they biofuels, conventional for than higher of producing are presently drop-in biofuels costs and risks While technical the fuels. marine and diesel jet, fossil for replacements biofuel on should be focus astrong reasons these For country. to the to bring tourists used fuel jet the oreven to market, Zealand’s New exports in getting embedded carbon the on more may focus markets in in profile, our export climate consumers change increases As Zealand. to New important strategically is Zealand’s sectors New ETS), these decarbonising shipping (1.4 in (and billion 2015) litres climate national change commitments lie outside aviation international and from emissions fuel fossil though that noted be should also It option. biofuel attractive an them making range tolerant of of awide fuels, are also Marine engines emissions. reducing carbon way one whilecould to goal be reach this also to 0.5% 3.5% from in inherently 2020. have so fuels marine alow content, Biofuels sulfur IMOThe (International in Organisation) levels to sulfur reduce Maritime regulated has . Reduce future market risks by focussing on feedstocks grown on non-arable on land grown feedstocks on by focussing market risks future . Reduce . Focus on drop-in biofuels that can be used in existing vehicles, ships and planes and ships vehicles, in existing used be can that drop-in on biofuels . Focus . Plantation forest feedstocks are New Zealand’s best long-term large-scale biofuel biofuel long-term large-scale Zealand’s New are best feedstocks forest . Plantation The scenario modelling showed conventional pine forests, where higher value sawlogs are sold into existing markets and lower value fibre logs and forest residues are used for biofuel production were preferred feedstocks at longer timeframes.
. In the short term, focus on niche opportunities to build momentum, provide early wins and create a positive perception of biofuels ROADMAP BIOFUELS NZ SCION Currently only small volumes of biofuels are being used and produced in New Zealand. There is also a very limited understanding of biofuels’ potential to address the country’s GHG emissions.
If biofuels are to be produced at large scale, it is imperative to start now to build knowledge and experience around how to make and use biofuels successfully, and to build general public confidence they can be successfully used.
Niche opportunities to produce biofuels ▪ Use currently-unused low-cost biomass wastes such as municipal green waste, municipal wood wastes and forest residues. ▪ Where users such as brand owners and tourism operators may be prepared to pay a premium for using biofuels. ▪ Focussing on large fuel users where refuelling is possible at a single point. These include mining companies and where vehicles or vessels return to base each night. This greatly reduces the investment and risks required in fuel distribution and use. ▪ Target marine fuels where the technical requirements for a successful biofuel are less demanding.
Arable land Land, typically flat, capable of being ploughed and used to grow crops. BEC2050 Study by BusinessNZ Energy Council: New Zealand Energy Scenarios, Navigating energy futures to 2050. Biomass Any organic matter, i.e. biological material, available on a renewable basis. Includes feedstock derived from animals or plants, such as wood and agricultural crops, and organic waste from municipal and industrial sources. BVCM Bioenergy value chain model Cellulosic ethanol/butanol Ethanol or butanol produced from lignocellulosic materials such as agricultural residues or wood. CO Carbon dioxide CO -e Carbon dioxide equivalent is a unit to measure the global warming potential of different gases. For example, emission of tonne of methane is equivalent to 21 tonnes of carbon dioxide. Conventional forests Forests grown in a traditional direct sawlog regime maximising timber production, but producing a range of different logs and forest residues. A 30-year rotation is assumed in the model. Co-product Material or energy that is produced at the same time as the main product. Drop-in biofuel A hydrocarbon fuel produced from biomass that is chemically identical to its fossil fuel equivalent. It can be used in existing engines and fuel distribution infrastructure without significant modifications. Energy crops Short term crops such as miscanthus or willow. Energy forests Short rotation forest plantations targeting maximum wood production. A 15-year rotation is assumed in the model. ETS New Zealand Emissions Trading Scheme EV Electric vehicle (battery powered) GDP Gross domestic product GHG Greenhouse gas GST [New Zealand] Goods and Services Tax L-e of fuel Litre equivalent in energy basis. Typically used to compare biofuels with different energy content. For example litre of ethanol correspond to 0.62 litres equivalent of petrol, as the energy content of ethanol is lower than that of petrol. Lignocellulose A major structural component of wood and some other plants, consisting of carbohydrate polymers (cellulose and hemicellulose) and lignin. Municipal solid waste In the context of this study, this refers only to the putrescible or green part of the waste collected by municipalities (e.g. garden and kitchen waste). Pyrolysis/upgrading Combination of two processes in which the first one (fast pyrolysis) produces an intermediate bio-oil from lignocellulosic biomass and the second one (upgrading) produces a mixture of drop-in petrol and diesel by reacting the bio-oil with hydrogen. Waste wood Wood sent to landfill, including construction and demolition waste. Appendix Crops, feedstocks, transport, technologies and fuels used in the model.
Land classes Feedstock transport Fuels NZ BIOFUELS ROADMAP BIOFUELS NZ Truck
Arable land Ship Petrol SCION High productivity flat Rail Bioethanol Medium productivity flat Biobutanol Drop-in petrol Non-arable land Rolling Diesel Steep Biodiesel Very steep Renewable diesel Drop-in diesel Forests/crops Aviation Renewable jet Drop-in jet Forestry Conventional forest Marine Energy forest Drop-in marine Oxygenated marine fuel Energy crop Willow Miscanthus Conversion technologies Arable crop Corn Alcohol to jet Maize Aqueous phase reforming Canola Biodiesel production Sugar beet Bio-oil upgrading Catalytic depolymerisation Cellulosic butanol Feedstocks Cellulosic ethanol Chipping Sawlogs Conventional butanol Fibre log Conventional ethanol Forest residues Direct sugars to hydrocarbons Gasification/fermentation Canola seed Gasification/Fischer-Tropsch Sugar beet Gasification/mixed alcohols Maize Hydropyrolysis Corn Hydrothermal liquefaction Willow Hydrotreating Miscanthus Mild bio-oil upgrading Municipal solid waste Oil extraction Waste wood Pelletising Tallow Pyrolysis Sawmill chips Torrefaction