ecologic.eu Policy and Economy of global biomass production and bioenergy biomass production and bioenergy Timo Kaphengst Ecologic 18.10.2007 – Oikos Conference, St. Gallen (CH)
ecologic.eu ecologic.de Part I: Economy and political framework 1. Introduction 1.1 What is biomass and what can it be used for 1.2 What makes bioenergy different to other renewable energies? 1.3 Current state of biomass production in the world 3. Political driving factors for bioenergy Excurse: Potentials of biomass supply Excurse: Potentials of biomass supply 4. Policy instruments to push bioenergy 5. Economic drivers for bioenergy 5.1 Variables influencing the profitability of bioenergy 5.2 Economic players of Agrofuel Boom 5.3 Key barriers for bioenergy in Europe (regional scale) Datum 18.10.2007 – Oikos Conference, St. Gallen (CH) 2
ecologic.eu ecologic.de 1. Introduction 1.1 What is biomass and what can it be used for? “The organic material derived from biological systems” Food Food Wood Wood B B I Material: Fibre, Chemicals,... Agricultural products O M A Organic wastes Bioenergy S S Marine Resources Biodiversity Datum 18.10.2007 – Oikos Conference, St. Gallen (CH) 3
ecologic.eu ecologic.de 1. Introduction 1.2 What makes bioenergy different to other renewable energies? • Wide range of applications • Electricity • Thermal • Thermal • Fuels (liquid, gaseous) • Storage capacities • Land dimension • Expected yields? • Land ownership? • Land competition? Datum 18.10.2007 – Oikos Conference, St. Gallen (CH) 4
ecologic.eu ecologic.de 1. Introduction 1.3 Current state of biomass production in the world Datum 18.10.2007 – Oikos Conference, St. Gallen (CH) 5
ecologic.eu ecologic.de 1. Introduction 1.3 Current state of bioenergy production in the world Source: F.O. Licht 2007 World fuel ethanol production 2006 World biodiesel production 2006 20.000 5000 18.000 18.000 4500 4500 4000 16.000 million litres 3500 14.000 million litres 3000 12.000 2500 10.000 2000 8.000 1500 1000 6.000 500 4.000 0 2.000 U y A y a e 0 l E S n a i c s a t n U y I m a a USA Brazil EU China r l r F a e M G Relation: Worldwide traded liquid fossil fuels: 920.000 million litres Datum 18.10.2007 – Oikos Conference, St. Gallen (CH) 6
ecologic.eu ecologic.de 2. Political driving factors for bioenergy • Combating climate change • Security of energy supply • Rural development and income opportunities • Estimated potentials of biomass Datum 18.10.2007 – Oikos Conference, St. Gallen (CH) 7
ecologic.eu ecologic.de Excurse: Estimated potentials of biomass in the EU Source: IE/BFH/ÖKO/UH 2005 Datum 18.10.2007 – Oikos Conference, St. Gallen (CH) 8
ecologic.eu ecologic.de Excurse: Estimated potentials of biomass Source: IEA (2005) „Global pattern 2030“ Datum 18.10.2007 – Oikos Conference, St. Gallen (CH) 9
ecologic.eu ecologic.de 4. Policy instruments to push bioenergy European Union: • Targets: • 5.75 % biofuel share in overall fuel consumption in 2010 • Set as binding: 10 % in 2020 • Mandated blend rates • Tax reductions and Subsidies: 3.7 billion Euro in 2006 (Kutas et al., 2007) • Excise Tax exemptions for biofuels: 1.8 billion Euro in 2005, 3 billion Euro in 2006 • Energy crop premium payment (45 €/ha) • Investment and research grants • Others: • Allowance to grow energy crops on set-aside land • Import Tariffs (especially on ethanol) Datum 18.10.2007 – Oikos Conference, St. Gallen (CH) 10
ecologic.eu ecologic.de 4. Political instruments to push bioenergy USA: • Targets: • 15% biofuel share in overall fuel consumption in 2017 • Tax reductions and Subsidies: • 51 % tax reduction for bioethanol • Subsidies for corn: 8.9 billion $ (2005) Datum 18.10.2007 – Oikos Conference, St. Gallen (CH) 11
ecologic.eu ecologic.de 5. Economic drivers for bioenergy Agrofuels (big scale): • Rising demand for liquid fuels and transportation • Using established structures for new markets • Increase public acceptance for corporate activities Biogas (small scale): • Diversification of production patterns • Risk minimisation • Optimisation of substance cycles • Cost reductions (fossil energies, waste disposal) Datum 18.10.2007 – Oikos Conference, St. Gallen (CH) 12
ecologic.eu ecologic.de 5.1 Variables influencing the profitability of bioenergy • Costs and availability of feedstock • Feedstock costs: 50-80% of overall production costs • Infrastructure (transport) • • Government regulation Government regulation • “Greatest uncertainty” • blend rates, tariffs, tax exemptions • Conversion technologies • Decisions: In which technology to invest? � Location of production Datum 18.10.2007 – Oikos Conference, St. Gallen (CH) 13
ecologic.eu ecologic.de 5.2 Economic players of Agrofuel Boom Investments in Agrofuels: • Agrobusiness (ADM, Cargill, Syngenta,…) • Oil industry (BP, Shell, PetroChina, …) (BP, Shell, PetroChina, …) • Finance (bank, equity funds) Source: Clean Edge 2006 • Car industry (DaimlerChrysler, VW,…) • Gentech Industry (Monsanto, DuPont,…) Datum 18.10.2007 – Oikos Conference, St. Gallen (CH) 14
ecologic.eu ecologic.de 5.3 Key barriers for bioenergy in Europe (regional scale) Economic conditions • Still subsidies on fossil and nuclear fuels • External effects and benefits not integrated Know-how and institutional capacities • Learning processes for farmers, regional planners, bank and maintanance staff Supply chain coordination • Connection between biomass supply and conversion technologies • Cooperation needed • Competition for biomass Source: McCormick &Kåberger (2007) Datum 18.10.2007 – Oikos Conference, St. Gallen (CH) 15
ecologic.eu ecologic.de End of part 1 Timo Kaphengst Ecologic, Pfalzburger Str. 43-44, D-10717 Berlin � � � � +49-30-86880-0, � � � � +49-30-86880-100 timo.kaphengst@ecologic.eu, www.ecologic.eu Datum 18.10.2007 – Oikos Conference, St. Gallen (CH)
ecologic.eu ecologic.de Part 2: Environmental and social issues of biomass production 1. Influencing factors of environmental impacts of bioenergy 2. Energy yields of bioenergies 3. Large scale impacts 4. Leakage Effects 5. Social effects of large scale biomass production 5. Social effects of large scale biomass production 6. Overall Conclusions 6.1 Winners and losers of current bioenergy boom 6.2 Remaining questions Datum 18.10.2007 – Oikos Conference, St. Gallen (CH) 17
ecologic.eu ecologic.de 1. Influencing factors of environmental impacts of bioenergy - Agriculture Crops used nce of bioenergy particular crop, perennial or annual, GMO etc. Indirect effects Cropping systems iculture crop rotations (farm and landscape level), large scale/small scale, agro-forestry, mono cropping/ multi- gative cropping etc.) Positive or negat cropping in agricu environmental performanc Evaluation Land use practises/ criteria management intensity intensiv or extensive, fertilizer input, plant protection products, machinery use, organic farming, management of grassland, no/ low tillage etc. Efficiency of Residue management biomass production extracted amount of agricultural residues, stubble management etc. and use Suitability of site chosen ecological sensitivity, suitability for farming system, indirect effects on adjacent land Datum 18.10.2007 – Oikos Conference, St. Gallen (CH) 18
ecologic.eu ecologic.de 1. Influencing factors of environmental impacts of bioenergy - Forestry mance of biomass Indirect Amount of biomass removed effects soil erosion and soil fertility, regulation of water flows/ water run-off, fire risk forests egative environmental performa Positive or neg removal from f Management practices Evaluation Technology used for harvest and residue extraction, criteria management practices (clear cuts, selected thinning etc.), timing of harvesting Efficiency of Suitability of site chosen biomass ecologically sensitivity, soil type and region, soil production steepness, protected area status and use Datum 18.10.2007 – Oikos Conference, St. Gallen (CH) 19
ecologic.eu ecologic.de 2. Energy yields of bioenergies Source: SRU (2007) Datum 18.10.2007 – Oikos Conference, St. Gallen (CH) 20
ecologic.eu ecologic.de 3. Large scale impacts - Deforestation Rainforest Loss due to palmoil plantations in Malaysia and Indonesia Current plantations 32.634 Planned plantations 75.110 Burned in wildfires 96.089 TOTAL 203.833 0 50.000 100.000 150.000 200.000 250.000 Photo: Marcel Silvius square kilometers Source: CSPI (2005) Datum 18.10.2007 – Oikos Conference, St. Gallen (CH) 21
ecologic.eu ecologic.de 3. Large scale impacts – High input land use Photo: Klemens Karkow Photo from Fritsche 2007 Datum 18.10.2007 – Oikos Conference, St. Gallen (CH) 22
ecologic.eu ecologic.de 4. Leakage Effects Displacement or so called leakage effects: “activity-induced changes in land use that occur outside the area in which the activity takes place“ Regional: shifts in land uses occur on adjacent land Global: former land uses shift to other parts of the world Datum 18.10.2007 – Oikos Conference, St. Gallen (CH) 23
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