guido ghisolfi

Guido GhisolfiVice President Corporate Operations & Research

BIOETHANOLBIOETHANOLHow sustainable?How sustainable?How convenient?How convenient?

Bioethanol Sustainability ConvenienceBioethanol Sustainability Convenience

A lot has been said about bioethanol production cost, price and environmental sustainability.

The interests involved are so large that it would be at least ingenuous to think that all statements on feasibility are moved by scientifical rather than political convictions.

I would like to present a strategical assessment to explain why ethanol can be considered in the portfolio of large chemical companies.

Bioethanol Supply / DemandBioethanol Supply / Demand

USAUSA Mandatory: 7.5 billion gallons = 22 million tons protected by 54 ¢/gallon import duty on Brazilian ethanol. Mandate has been increased in the last Energy Bill to 35 billion gallons by 2022. Capacity installed and under construction: 12 billion gallons.

EUEU Mandatory: 5.5% by 2010 equivalent to 11 million tons. New target set on January 24 by the European Commission to 10% by 2020.Current installed capacity: 3 million tons.

BrazilBrazil Production: 17 million tons from sugar cane.Brazil has 5 million hectares at sugar cane and can double its plantations in the near future.

European SustainabilityEuropean SustainabilityThe targets of 20 million tons of The targets of 20 million tons of biofuelbiofuel for 2010 and 40 million tons for 2020 for 2010 and 40 million tons for 2020 are not going to be achieved without importare not going to be achieved without import. In fact:

The European Community has published a study (http://reports.eea.europa.eu/eea_report_2006_7/en) on the arable land usable for biofuels with the following results:

Ha Year12,000,000 201016,000,000 202019,000,000 2030

With a yield of biofuel of 2 t/ha in 2010 and 3 t/ha in 2020, the land might be there.

Logistics and agricultural economics will prevent though the use of part of this land demanding the import of at least 30% of the necessary biofuel.

BioethanolBioethanol: A Global Strategic Assessment: A Global Strategic Assessment

Prof. Ricardo HausmannProf. Ricardo Hausmann, Director of Harvard University’s Center for International Development, writes that (Financial Times, November 7, 2007):1) In some 95 countries there are more than 700 million hectares of good quality land which is not cultivated;2) Depending on the assumption about productivity per hectare, today’s production of 85 million b/d of oil can be completely satisfied by the biofuels produced on such land;


3) Even if partially used, this large potential biofuel supply will cap the price of oil because its supply is much more elastic than the supply of oil.

This will cause the price of oil to be set This will cause the price of oil to be set at marginal cost of bioat marginal cost of bio--energy.energy.

If OPEC tries to raise prices above the price of biofuel, profitability will only crowd in more biofuels.


4) The countries which have the largest endowment of under-utilized lands are in the developing countries, especially Latin America and Africa. Bioenergy will make the needed infrastructure investments socially profitable creating a possible stepping stone into other industries.

Is Is bioethanolbioethanol worth the effort?worth the effort?

A recent study published by Argonne National Laboratory of the University of Chicago and endorsed by the US Department of Energy, updates the Well-to-Wheels Study of Life Cycle Analysis for Fuel Ethanol.

The LCA takes into consideration both the in- and output energy balance in the production of fuel ethanol and the impact on GHG for the various feedstocks and compares it with all fossil fuels including the possible extraction from oil sands.

Updated Well-to-Wheels Results of Fuel Ethanol with the GREET ModelMichael WangCenter for Transportation Research – Argonne National Laboratory

Presentation to the Biomass R&D Technical Advisory Committee Detroit, MI, Sept. 11, 2007Available at www.transportation.anl.gov/software/GREET/index.html

The GREET ModelThe GREET Model

GGreenhouse gases,reenhouse gases, RRegulated egulated EEmissions, missions, and and EEnergy use in nergy use in TTransportation ransportation

Developed at Argonne since 1994;

More than 100 fuel production pathways from various feedstocks;

75 vehicle/fuel systems.

Well to WheelsFuel Cycle GREET 1.8

Vehi

cle

Cyc

le G

REE

T 2.

8

Energy and Emission Outputs with GREETEnergy and Emission Outputs with GREETEmissions of greenhouse gases (GHG)

CO2, CH4 and N2O (and other optional GHGs)

Emissions of six criteria pollutants

VOC, CO, NOX, SOX, PM10 and PM2.5;

Total and urban separately.

Energy use by type

All energy sources (fossil and non-fossil);

Fossil fuels (petroleum, natural gas and coal combined);

Petroleum;

Coal;

Natural gas.

Fuel Production Pathways from various Energy Fuel Production Pathways from various Energy FeedstocksFeedstocks (Well(Well--toto--Pump) in GREETPump) in GREET

Petroleum: Conventional

Oil Sands

Natural gas: NA

Non-NA

Coke Oven Gas

Nuclear

Coal

Gasoline Diesel LPG

Naphtha Residual Oil

CNG LNG LPG

Methanol Dimethyl Ether

FT Diesel & Naphtha Hydrogen

Hydrogen FT Diesel Methanol

Dimethyl Ether

Hydrogen

Sugar cane

Cellulosic Biomass:

SwitchgrassFast growing

trees Crop residues

Forest residues

Residual Oil Coal

Natural Gas Nuclear Biomass

Other renewables

Butanol

Ethanol

Biodiesel

Electricity

Soybeans

Corn

Ethanol Hydrogen Methanol

Dimethyl Ether FT Diesel

FeedstocksFeedstocks for for biofuelbiofuel production are diversified production are diversified and vary across regionsand vary across regions

The feedstocks that are underlined are already included in the GREET model.

Sugar CropsSugar cane

Sugar beet

Oil Seed CropsSoybean

Rapeseed

PalmOthers

Waste cooking oil

Animal fat

Grain StarchCorn

Wheat

Barley

Sorghum

Cellulosic BiomassCorn stover, rice straw,

wheat straw

Forest wood residue

Municipal solid waste

Energy crops

Black liquor

Fast growing trees

GREET Ethanol LifeGREET Ethanol Life--Cycle Analysis includes activities from Cycle Analysis includes activities from fertilizer to ethanol at refueling stationsfertilizer to ethanol at refueling stations

These pathways are already included in the GREET model.

Agricultural chemical production

Agricultural chemical transportation

Corn farming

Crop residue collection

Switchgrassfarming

Fast growing tree farming

Forest residue collection

Sugar cane farming

Corn ethanol production

Cellulosic ethanol production

Sugar cane ethanol production

Animal feed Co-produced electricityEthanol transportation

Ethanol blending at bulk terminal

Ethanol blends at refueling station

Key Issues for Key Issues for BioethanolBioethanol LifeLife--Cycle AnalysisCycle Analysis

Nitrogen fertilizer production:

Nitrogen fertilizer is produced primarily from natural gas. About 40% of total US ammonia demand is met by imports (2005).

Use of fertilizer and chemicals in farms:N2O emissions from N-fertilizer application;Lime application: CO2 emissions

Farming is a key activity for cellulosic biofuel life cycle.

Open field burning in sugar cane plantations causes significantemissions (80% of can is harvested by burning in Brazil).

Key Issues for Key Issues for BioethanolBioethanol LifeLife--Cycle AnalysisCycle Analysis

Energy use in corn ethanol plants:The amount of process fuels for steam production;The type of process fuels.

Co-products:Animal feeds for corn ethanol;Electricity for cellulosic and sugar can ethanol.

Potential land use change and resulted CO2 emission.

Data for new ethanol plants is from Mueller and Cuttica (2006)

010000200003000040000500006000070000

Btu

/Gal

lon

Wet Mill Dry Mill

Average 1980s Average 2005New NG EtOH Plant Expected at Rivalta Plant 2009

Improved technology and plant design has reduced Improved technology and plant design has reduced energy use and operating costs in corn ethanol plantsenergy use and operating costs in corn ethanol plants

30% reduction 50%

reduction

~1/3 of energy is spent on DDGS drying

CornCorn

57,2%

3,6% 1,5%

18,3%

17,1%

0,0%

2,3%

EtOHProduction

EtOH Transport

Vehicle use

Farming

Fertilizers / Chemicals

Farming machineryFeed transport

LifeLife--Cycle Fossil Energy Use: Corn Grain EthanolCycle Fossil Energy Use: Corn Grain Ethanol

Most recent studies show positive net energy balance for Most recent studies show positive net energy balance for corn ethanolcorn ethanol

New generation

ethanol*

Use of renewable process fuels improves net energy Use of renewable process fuels improves net energy balance significantly for corn ethanolbalance significantly for corn ethanol

-400000

-200000

0

200000

400000

600000

800000

Cur

rent

Futu

re

Cur

rent

Futu

re NG

NG

& W

et

NG

& C

HP

1 million Btu fuel produced – Btu fossil energy input

Gasoline Average EtOH

New EtOH with NG

New

EtO

Hw

ith

gasi

ficat

ion

of b

iom

ass

-19% -21%

-28%-32%

-36%-39% -39%

-52%-60%

-50%

-40%

-30%

-20%

-10%

0%

10%

Large Avoidance of GHG Emissions by Corn Ethanol with Large Avoidance of GHG Emissions by Corn Ethanol with Use of Renewable Process FuelsUse of Renewable Process Fuels

Relative to gasoline in 2010Cu

rren

t Ave

rage

Futu

re A

vera

ge

NG

NG &

CHP

NG &

Syr

up

NG &

Wet

DG

S

DGS

Gas

ifica

tion

of B

iom

ass

From corn to sugar cane to cellulosic biomass, GHG From corn to sugar cane to cellulosic biomass, GHG emissions avoidance are increasedemissions avoidance are increased

GHG Emission Reductions by Ethanol Relative to Gasoline (per Energy Unit Basis)

-19%

-28%

-39%

-52%

-76% -76%

-85%-90%

-80%

-70%

-60%

-50%

-40%

-30%

-20%

-10%

0%

10%

Cellulosic ethanol (hydrolysis of biomass)

Corn ethanol

Curre

nt

NG

DGS

Biom

ass

Suga

r Can

e Et

OH

Switc

hgra

ssEt

OH

Fore

st R

esid

uel E

tOH

Sugar Cane

0

100000

200000

300000

400000

WTP

GH

Gs

Emis

sion

s, G

ram

s/bb

lCon

v. Cru

de G

asoli

ne

OS Gas

oline

: mini

ng, N

G

OS Gas

oline:

mining

, coa

l

OS Gas

oline:

mining

, nuc

lear

OS Gas

oline

: in-si

tu, N

G

OS Gas

oline:

in-sit

u, co

al

OS Gas

oline:

in-sit

u, nu

clear

OS Gas

oline

: mini

ng, N

G

OS Gas

oline:

mining

, coa

l

OS Gas

oline:

mining

, nuc

lear

OS Gas

oline

: in-si

tu, N

G

OS Gas

oline:

in-sit

u, co

al

OS Gas

oline:

in-sit

u, nu

clear

Low HLow H22 Use for UpgradeUse for Upgrade High HHigh H22 Use for UpgradeUse for Upgrade

WTP GHG results show that oil sands operations are WTP GHG results show that oil sands operations are carboncarbon--intensiveintensive

BioethanolBioethanol: Second Generation: Second Generation

It is clear that the target is:

A cellulosic ethanolcellulosic ethanol competitive with fossil fuels…

…produced by a relatively cheap biomassrelatively cheap biomass…

…which can be intensively grownintensively grown…

…on less available landless available land…

…using less waterless water and less fertilizersless fertilizers!

68

4939

4 4 20,0

10,0

20,0

30,0

40,0

50,0

60,0

70,0

80,0

WheatStraw

CornStover

BarleyStraw

Oat Straw Rye Straw Rice Straw

MM

T/Y

+ 4 + 4 MhaMha Set aside landSet aside land

Agricultural Waste Potential Agricultural Waste Potential -- EUEU

Source: FAO (1999) – data limited to western EU (A, B, L, DK, FI, F, DE, GR, I, NL, P, E, S, UK)

LignoLigno--Cellulosic Ethanol Cellulosic Ethanol –– EU and Italian OverviewEU and Italian Overview

41%

14%8%

10%

27%

Corn StoverCorn Stover

France

OthersGermanySpain

Italy

19%

19%

27%

15%

7%

13%

Others

France

Spain

DenmarkUK

Germany

Barley StrawBarley Straw

Agricultural Waste Potential Agricultural Waste Potential -- EUEU

Wheat StrawWheat Straw

Others

France

Spain

ItalyUK

Germany

38%

13%20%

5%

8%

16%


5,4

13

1,10,2 0

0,9

0,0

2,0

4,0

6,0

8,0

10,0

12,0

14,0

WheatStraw

CornStover

BarleyStraw

Oat Straw Rye Straw Rice Straw

MM

T/Y

Agricultural Waste Potential Agricultural Waste Potential -- ItalyItaly

Source: FAO (1999)


BioethanolBioethanol: Second Generation: Second Generation

M&G believes that the objective is at reach.

A biomass that yields 60 dry tons/ha vs. 12 for corn

with only 50 unitN2/ha vs. 170 for corn and no irrigation requirement vs. 3500 m3/ha of cornM&G has launched the PRO.E.SA. project to achieve this goal within 2012.

BioethanolBioethanol: Conclusions: Conclusions

M&G has the only corn based 200 kt ethanol plant under construction in Italy with start-up expected for Q3 2009.

M&G has started a € 120 million R&D program to identify the optimal biomass and the most competitive hydrolysis process for second generation EtOH.

M&G expects to have a proven 20,000 t/y semi-industrial plant by 2011

and

Convert the corn ethanol to cellulosic by 2012 reducing the necessary hectares to supply the plant from 65,000 to <10,000.

Thank you!Thank you!

guido ghisolfi

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