national biomass strategy -...

National Biomass Strategy

Bioeconomy and Malaysia’s Palm Oil Industry

MALAYSIA

COLOMBIA

18,284km

THE DISTANCE (CONNECTION)

26 hours

THE OIL PALM INDUSTRY IN A GLANCE

CURRENT CHALLENGES

• Fluctuating palm oil prices

• Competitions especially from soybean

• Possible large surpluses of vegetable oil in 2020 (there were stockpiles in 2014-2016 due to excess)

• Phasing out of 1G biodiesel market in Europe and US (Renewable Diesel)

• Many plantations are old and in need of replanting, and little opportunity for new planting (capped at 6 million hectares)

• Shortage of labour on plantations – 77% are foreigners (from Indonesia)

• Association with environmental issues –struggling with certification (RSPO)

THE MALAYSIAN OPPORTUNITY

• Attractive market for high-value oleo-chemical and 2G products (products) – food derivatives, pharmaceutical and etc.

• Potential bio-based substitutes for fossil-based materials• Limited local oil reserves for long-term – need to develop alternatives • Creating local demand for biodiesel – blending mandates• Well-developed infrastructure that could be shared across various

bio-based downstream industries• Availability of (highly) skilled local young workforce• Can potentially contribute to environment if managed properly

THE THOUGHTS ON FUTURE• 75% of chemistry and advanced materials strategy officers agree that by 2025

the primary feedstock for chemical production will shift from oil & gas to bio based and recycled materials Source: Survey conducted among Industry Strategy Officers, Sept 2015

– World Economic Forum, 4th Industrial Revolution

1.ABOUT AIM

• Governance Structure

• Innovation Ecosystem

• Transforming Strategic Sectors

Agensi Inovasi Malaysia (AIM), Malaysia’s National Innovation Agency is astatutory body, under the Prime Minister’s Department created to jump startwealth creation through knowledge, technology and innovation to stimulate anddevelop the innovation eco-system in Malaysia. We lay down the foundation ofinnovation that inspire and produce a new generation of innovativeentrepreneurs.

VISION:• Wealth creation through

knowledge, technology and innovation.

MISSION:• To stimulate and develop the innovation eco-system in

Malaysia towards achieving Vision 2020.

OBJECTIVES:• Generate additional revenue and contribute to Malaysia’s

GDP.• Provide additional jobs for the Malaysian workforce.• Inspire and produce a new generation of innovative

entrepreneurs.• Facilitate the evolution of Malaysian companies into major

global players.

AIM’S INNOVATION ECOSYSTEMEquipping Malaysia’s next generation

with ability to think critically and creatively

Catalysing the social sector eco-system to

enable strategic public-private collaboration & citizen empowerment

Catalysing greater collaboration activities between industry and academia to generate commercial-ready IP

Making selective investments to catalyse

new ventures and startups (future leaders

in innovation)

Providing support to mid-size and large organisations on

innovation

Defining national strategies to transform identified strategic sectors

of the future

TRANFORMING STRATEGIC SECTORS

Initiatives that have a direct impact on the economy, job creation, and

industry formation

Increase in GNI, Revenue and Create Regional and Global Companies

Increase in High Value Jobs

2.BIOECONOMY

• Definition

• Implementation Pathways

• Malaysia’s Bioeconomy

Bioeconomy can be understood as a world in which biotechnology contributes to a considerable extent to the economic output - OECD

The bioeconomy comprises those parts of the economy that use renewable biological resources from land and sea – such as crops, forests, fish, animals and micro-organisms – to produce food, materials and energy (Europe’s Bioeconomy Strategy, European Commission, 2012) .

THE BIOECONOMY DEFINITIONS

CONTRASTING BIOECONOMY PATHWAYS

THE MALAYSIAN STORYIn 2005, Malaysia among the first few countries in the world to look at Bioeconomy

1st Country in ASEAN

2nd Country in Asia after China

• As of 2015, BIOECONOMY as a whole is estimated at 11.3 % of the totalMalaysian GDP, a contribution equivalent to RM131 billion (USD 30 billion).This value encompasses economic impact from all sectors of economy thatcould possibly benefit from application of bio-based technology, likeagriculture, chemical production, as well as oil and fat processing.

• At a stimulated 15% annual growth, the size of the Malaysian BIOECONOMYsector is projected to grow to RM149.1 billion in 2020 and RM181.2 billion in2030 respectively.

3.NATIONAL BIOMASS STRATEGY

• Malaysia’s National Biomass Strategy

• The Impact and Pathways (Understanding Local Dynamics)

• National Biomass Strategy Develiry Unit

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WASTE WEALTH SCENARIO (THE PALM INDUSTRY)

Copyright 2016 by Agensi Inovasi Malaysia. All Rights Reserved.

OBJECTIVE OF THE NBS2020

16

high-value downstream activities(e.g., bioenergy, biofuel, biochemical)

Primary objective: maximize sustainable GNI impact from biomass in the 2020 time frame

Other considerations▪ Downstream▪ High value job creation▪ “Indigenous technology” creation within

Malaysia (direct and indirect value creation)▪ Sustainability impact and emissions impact▪ Using Biomass as leverage to form smart

partnerships with downstream companies

Strategy Design principles

▪ Private Sector Led▪ Portfolio Approach for Downstream Activities

and Objective industry facilitation▪ No Specific Technology Recommendations

Malaysia’s Opportunity to Capture

RM30 billion additional GNI impact

~66,000 new jobs

RM25 billion investment opportunities

~12% CO2e abatement

TOTAL PALM OIL PLANTED AREA (2014)

SOURCE: As of end December 2014 ; MPOB; Poyry

Copyright 2016 by Agensi Inovasi Malaysia. All Rights Reserved. 18

SOURCE: MPOB; Interviews

1 Based on end 2014 records, 5.39m ha total planted areas in Malaysia, 4% replanted area per year and company specific information

MALAYSIA generates sufficient amounts of dry palm biomass per year and availability subjected to mobilisation cost

Solid(dry weight)

POME

Annual AvailabilitySite of production

Per ha(tonnes)

National total(m dry tonnes)1DescriptionBiomass Type

MillLiquid by-product from steriliza-tion and milling process of FFB

Shells(PKS)

MillRemains after palm kernel oil extraction

MillRemains after oil extraction from mesocarp

MillRemains after removal of palm fruitsEFB

Fiber(MF)

Fronds PlantationLeaves of oil palm tree

Trunks

12.2

0.8

1.4

1.4

9.6

3.0Plantation

65.7

4.3

7.5

7.5

51.7

16.2Tree trunk available at end of plantation lifecycle

Liquid(wet weight)


A detailed costing methodology has been developed to illustrate how biomass can be mobilized in a Sustainable Way


Stakeholder involvementAdvisory panelStakeholder labsSurvey with ~200 plantations and ~200 mills

20

Inclusive stakeholder efforts on the development of National Biomass Strategy 2020: 300+ interactions (development work in 2010 and launched in 2011)

INDUSTRY – GOVT – ACADEMIA COLLABORATION

Copyright 2012-2015 by Agensi Inovasi Malaysia. All Rights Reserved.

Moderador

Notas de la presentación

More than 150 individual involved Government includes: Mosti, MoFinance, KPPK, Kettha, MoAgriculture, NRE and also agencies like BioTechCorp, GreenTechCorp, MIDA Corporate sector includes: Major plantations Felda, Sime, United, Kulim, Boustead and demand side PURAC, MLSCF Research institutes & academia: SIRIM, MARDI, FRIM, UKM, UPM, UTM, USM, TU Delft

http://bestschoolinformation.org/scholarship-to-malaysia-from-cimb/cimb-blue1/

http://4.bp.blogspot.com/_UHyrAj3FLso/S6PaFWLNmWI/AAAAAAAABMo/WKWWCcndaxw/s1600-h/Logo+MOF+-+Perbendaharaan+Malaysia.png


0

5

10

15

20

25

30

35

202020152011

Additional 20% biomass shift towards portfolio of Higher Value Uses by 2020 (inclusiveness)

Energy

Wood products

1%

1%3%1%4%

Use of biomass by type of end-product

6%

4%

9%

3%

9%

Share of total biomass availablein given year

Fuels

Pellets

Biobasedchemicals

Business as usual

Biomass usedMillion tonnes, dry weight

11% 31%Total:

Pellets enable profitable mobilization today, and act as

flexible buffer once biobased chemicals become commercially available

Biomass to wealth

~14 bln

~8 bln

~8bln

~3bln

~2bln

GNI


The National Biomass Strategy looked into 4 Key Aspects of Malaysia’s Potential to Develop a Sustainable Biomass Industry

i Availability, Cost, Location of Biomass in Malaysia

ii Technology Available to Process Biomass (Maturity)

iii Portfolio of Uses for Biomass

iv Malaysia’s Biomass Opportunities2011: Oil Palm Biomass

2013: Expanded Scope to Cover Forestry and Dedicated Crops As Source of Biomass


25 m tonnes of biomass could be mobilised across Malaysia


Biobased Chemicals should offer highest value-add in the future

24-78

1,100-3,515

430-1,100

380-1,250

15-150x

215-390

Revenue generated per tonne of lignocellulosic biomass input (dry weight)RM

Upper range

Lower rangeFertilizer

Bioenergy

Biofuels

Biobased-chemicals

Existing revenue per tonne today

Wood industry / Pellets

*Based on figures 2010-2011

Changing Prices of Downstream Products:USD90-96 cfr in the latest tender by EWP for 30,000t wood pellet for March, delivery May 2016.(Source: Argus)

Changing Prices of Downstream Products:USD110-120 FOB Vietnam to Japan with FM Certification (Source: Argus)


Wide range of downstream uses for ligno-cellulosic biomass: 2G BioFuelshave reached commercial scale, 2G Biochemical between 2016-2020

SOURCE: MOSTI R&D for Biomass 2010, Status of 2nd Generation Biofuels Demonstration Facilities in June 2010, MY-Basic Workshop February 2011, Expert interviews

Today2014

Fertilizer Wood industryOther BioenergyPellets

2015

2020

Ligno-cellulosic pathway

Biobased-chemicals

In 2013, Lignocellulosic biofuels already being

commercialized (accelerated pace)

Biofuels

Beta Renewables’ cellulosic ethanol facility in Crescentino, Italy is the first plant in the world to produce commercial quantities of advanced biofuels.

40-60K/annum capacity(fermentation based)

October 2013 Sept 2014

Poet-DSM became the World’s 2nd Cellulosic Ethanol Plant using straws as feedstock located in the US

70K/annum capacity(fermentation based)


VALUE CHAIN IN MALAYSIA


Portfolio approach to downstream allows integration building asustainable business model

THE BIOMASS CENTRAL FACILITATION UNIT

4.DEFINING STATE LEVEL STRATEGIES

• Internalisation of National Strategy at a State Level

• Capabilities and potential differs between locations

• Local Governments championing imperative to continuity and long-term success


NBS 2020 Succession Plan: State Level Champions To Drive NBS (Internalisation)


32

SABAH & SARAWAK: ” LAUNCHPAD FOR MALAYSIA AS THE PREMIER BIOMASS PROCESSING HUB IN SOUTH EAST ASIA”

• Close collaboration between Federal and State Governments

• Both states account for more than 50% of the biomass generated in the country

• Potential for• RM 8.0 billion in GNI• > 55,000 jobs• > RM 31.5 billion in investment in East

Malaysia

Officially launched by YAB Dato’ Sri Mohd Najib Bin Tun Haji Abdul RazakOn the 25th February 2016

Moderador


Sabah The Delivery Unit would be chaired by Deputy Chief Minister and Minister of Industrial Development Sabah with the support of an Advisory Council and on ground working team to drive the execution of Sabah’s action plan. (State and Federal Government Collaboration as part of NBS Initiative with AIM) Sarawak We have agreed on a taskforce where SPU will be leading and AIM will be part of it, as part of NBS2020 internalization beyond 2020. After the launch today, we will start drawing down details of the taskforce and look into the implementation timeline for respective items under the action plan. One of key items agreed by SPU and AIM is that we will ensure implementation of Brooke Renewables project in 2016 to spearhead the Hub project for Sarawak. This can be a basis for the MEG Plant GS will also build the pipeline into another area highlighted in the action plan which is Bio butanol. Announcing the Sabah and Sarawak biomass development plans as a Launchpad for Malaysia as the premier biomass processing hub in south east asia Sabah: YB Datuk Panglima Raymond Tan Shu Kiah, Deputy Chief Minister will be representing the Sabah Chief Minister Sarawak: YB Datu Haji Len Thalif Salleh, Assistant Minister will be representing the Sarawak Chief Minister


Manure

Municipal Solid Waste

Oil Palm Biomass

1G Feedstock (Sugar/Starch) & Other

Agricultural Waste

Forestry Residues / Timber Plantation

Dedicated Crops

Research & Development Centre

Biomass Depots

Bio-port

A BIO-HUB CONCEPT

34

Portfolio approach and integration allows a sustainable and more resilient business model


BIOMASS VALUE CHAIN – Digital Economy (Agriculture & Bio Manufacturing) – Industrial Revolution 4.0


Community-based Dedicated Crop Contracting and Farming provides involvement of rural population with sustainable source of income


Greenpeace champions ‘environmentally responsible’ and ‘socially just’ solutions

Sarawak could become an example for sustainability and green industries - creating a positive image amongst stakeholders globally

37

• Growing Carbon negative crops on marginal land not suitable for agriculture (part of reforestation efforts)

• Replacing fossil fuels based resources

• Re-using biomass waste

• Improving quality of life for rural communities

WWF key criteria for sustainability are:• Cleaner Energy • Less Waste

Source: Team analysis.


THE LAUNCH OF SABAH AND SARAWAK BIOMASS DEVELOPMENT PLAN AS PART OF SOUTH EAST ASIA’S PREMIER BIOMASS PROCESSING HUB

38

SABAH AND SARAWAK Launchpad for Malaysia as the Premier Biomass Processing Hub in South East Asia.: (From left) PermanentSecretary of Ministry of Industrial Development Sabah Datuk Hashim Paijan, Agensi Inovasi Malaysia CEO Mark Rozario, Minister ofInternational Trade and Industry Dato’ Sri Mustapa Mohamed, Sabah Deputy Chief Minister Datuk Raymond Tan Shu Kiah, Minister in thePrime Minister’s Department Dato’ Mah Siew Keong, Prime Minister of Malaysia Dato’ Sri Najib Tun Razak, Sarawak Assistant Chief MinisterDatu Haji Len Talif Salleh, Director of Sarawak State Planning Unit Datu Haji Ismawi, Minister of Science, Technology and Innovation DatukSeri Panglima Madius Tangau, Minister in the Prime Minister’s Department Dato’ Sri Abdul Wahid, Deputy Finance Minister Datuk Johari atPrime Minister’s Office, Putrajaya


The Sabah Biomass Industry Development Plan can strengthen Malaysia’s proposition as the Premier Biomass Processing Hub

25

Note: The forecast is based on dedicated feedstock supply and not taking into consideration feedstock sharing/optimisation.

Sabah Biomass Industry Dev. Plan The Sabah Biomass Opportunity …

Could help Sabah capture:

~RM3.2 billion* additional revenue per year

~25,000+ new Green jobs

~RM13.5 billion in investments

Moderador


Note: * The forecast is based on dedicated feedstock supply and not taking consideration of feedstock sharing/optimization by 2027. 19 million dry tonnes of biomass supply potential today for Sarawak 90% of preferred biomass feedstock such as EFBs not utilised in Sarawak – tremendous opportunities available In Sabah, industry players have successfully demonstrated that biomass can be mobilized for the purpose of power generation. Including planned projects, the combined power plants that sell electricity to the grid under the FiT program will consume over 1 million tonnes. In addition to power plants, pellet plants in Lahad Datu and Tawau are starting to become established. This is the phase Sabah is in now. Going forward, while significant volumes of biomass are committed for the power plants, other sources of biomass (such as Oil Palm fronds) can be used to support future investments. Working with Poyry, we have identified several advanced investment options (biochemicals + bioethanol) for the state of Sabah. Examples of Biochemicals that are technically feasible from 2G biomass today and offer an attractive market opportunity include n-Butanol, Xylitol (used as a sweetener in chewing gum), and Mono-Ethylene Glycol (MEG) that is used in the production of plastic bottles. If Oil palm fronds are mobilsed and 6-8 plants are constructed, the impact will be material in achieving the goals set out by the NBS strategy: nearly 5 million tonnes of biomass, over 3 billion MYR in revenue and nearly 12,000 highly skilled jobs will be created


Sandakan, Lahad Datu, and Tawau can mobilise 4.8 million dry tonnes of biomass with future potential in Labuk Sugut

40

2

3

1 Sandakan

Lahad Datu

Tawau

4 Labuk Sugut (Potential)

Moderador


There are four potential clusters with Labuk Sugut in the second phase of development after Lahad Datu, Tawau and Sandakan Today, 1.2 million tonnes of EFBs already utilize in the Biomass Power Plant operations, total 9 Biomass IPPs to date with capacity close to 100MW This shows that large scale mobilization possible, for Sabah is now moving towards higher value added like liquid biofuels and biochemical


Renewable energy policy in Sabah has lead to significant investment in biomass-based power generation

41

22

4398

23

18

30 30

Estimated RE Capacity

146

Planned

49

910

2011-2014

475

2006-2010

252

2001-20052000 RE Capacity

3

SREP program in 2001

Renewable energy capacity in Sabah1

MW

WindSmall-Hydro Geo-thermalSolarBiomass

FiT program in 2014

1 Grid connected capacity


And there are now 9 power plants consuming over 1 million tonnes of biomass

42

Biomass Power Plant

FELDA (Sahabat)

Seguntor Bioenergy

Teck Guan (Evergreen)

Bell (planned)

TSH Bioenergy

Kina Biopower

Kwantas (SD Resources)

IOI Sandakan

Cash Horse

Biomass Consumption1

000 tonnes EFB PKS RegionCapacity MW

Sandakan1 15

Sandakan2 12

Sandakan3 11.5

Sandakan4 11.5

Lahad Datu5 10

Lahad Datu6 15

Tawau7 14

Tawau8 8

Lahad Datu9 6

~97.8 MW1.16 million tonnes

Not all plants in operation yet


5 investments were identified as opportunities for Sabah within 10 years

43

Commercial-scale Teck Guan plant using EFB and fronds as feedstock

Bio-energy in Labuk Sugut with minimum infrastructure investment

Integrated MEG and ethanol plant in Labuk Sugut with significant investment on infrastructure (jetty, roads, utilities)

Integrated xylitol and ethanol plant in Lahad Datu using fronds as feedstock

Improvement of current pellet plants in Lahad Datu and Tawau to reach profitable commercial-scale industry

N-butanol plant in Tawau with remaining EFB and woody biomass as feedstock

Moderador


Integrated plants would be key for Sabah to capture the opportunity maximizing the biomass resources and co-exist with present industries Example: MEG Plants with Pellet Plants and IPPs


The Sabah biomass industry offers several development opportunities over time

281 Improvement to existing pellet plants in Lahad Datu and Tawau, no Capex required2 Revenue gained by the private investors3 1.2 mn dry ton biomass released from biomass power plants

Biomass mobilised

mobilisationmobilisation

Moderador


In order to develop Phase 2, which is the biofuels and biochemical sector, in areas like Lahad Datu, oil palm fronds must be mobilized. Today, Sawit Kinabalu started mobilizing fronds for animal feed and it is cost effective given the radius of 10km The management believes that it can optimize for a larger radius with cost competitive to that of EFBs


Sarawak has the opportunity to become a leader in high-value biomass industries, and Asia’s First Integrated Biomass Hub

29Note: The forecast is based on dedicated feedstock supply and not taking into consideration feedstock sharing/optimisation.

Sarawak Biomass Industry Dev. PlanThe Sarawak cluster could become Asia’s …

1st Commercial-scale biomass plantation

1st Multi-feedstock Biomass Hub

1st Bio-port

1st 2G Ethanol plant

1st 2G Bio chemicals plant

And could help Sarawak capture:

~RM4.8 billion* additional revenue per year

~35,000+ new Green jobs

~RM18 billion in investments

Moderador


Note: * The forecast is based on dedicated feedstock supply and not taking consideration of feedstock sharing/optimization by 2027. 19 million dry tonnes of biomass supply potential today for Sarawak, but mobilise only 6 million (cost effective radius) within the four clusters, don’t include dedicated crop as feedstock. 90% of preferred biomass feedstock such as EFBs not utilised in Sarawak – tremendous opportunities available Dedicated crop plantation prospects - 47,000 hectares in Sarawak (with yield of 30 hectares good for another 1.4 million dry tonnes of feedstock) – 3 chemical plants


Sarawak can mobilise 6 million dry tonnes of biomass in 4 main clusters, Bintulu & Miri highest potential

46

Note: 1 Biomass of harvesting residues from timber and rubber plantations excluding natural forest

Moderador


Highest potential cluster Bintulu and Miri Bintulu (38%) and Miri (26%) account for more than 60% of available downstream biomass such as EFBs, PKS and etc.


Miri, Bintulu and Samalaju Ports have competitive delivered biomass costs with short distances of supply sources

47

Biomass clusterDelivered Biomass cost1

MYR/dry tonneEFB and OPFSupply sources

Potential biomass uses

1 Weighted average cost based on 500 kt of supply

63 22992

114 124

126127

Miri

Bintulu

Tanjung Manis

Kuching

120-150km road distance from Miri Port

90-130km km road distance from Bintulu Port

230-310km km driving distance + barging from Tanjung Manis Port

400-500km driving distance + barging from Kuching Port

No existing consumers of biomass

Planned: 1 pellet plant, 1 bioethanol plant, 1 power plant, Existing: 2 refineries

2 wood pellet plants

1 wood pellet plant

50

50

50

50

71 97190

190

190

190

56 32086Samalaju

80-100km km road distance from Samalaju Port

No existing consumers of biomass

50 190

OPF EFB Harvest residuesEFB + OPF

87

89

Source: State Government, AIM, Poyry Analysis, 2015


Within the next 6 years, 3 to 5 bio-based chemical plants could be established in the relevant clusters

48

For Kuching and Tanjung Manis each …a. A demonstration plant using EFB

only, orb. A full-scale MEG or xylitol plant

using EFB as feedstock, orc. A pellet plant using only EFB as

feedstock

1 integrated commercial scale chemical plant in Samalaju using EFB as feedstock

1 integrated commercial scale chemical plant in Miri using EFB as main feedstock

Brooke Renewables ethanol plant in Bintulu using dedicated short rotation crops as feedstock

Sarawak Biomass Industry Development: Plan Phase I and II

5

Moderador


For higher value downstream applications, probable locations only Bintulu and Miri, biofuels and biochemical For Brooke Renewables project, it is in the Bintulu area. Feedstock requirement about 300,000 dry tonnes of biomass input, capacity 60,000 tonnes p.a. bioethanol plant. Other clusters present more bioenergy related and mechanical opportunities in the short to medium term


The available biomass at a competitive cost can support new investments in four phases over time

49Note: The forecast is based on dedicated feedstock supply and not taking consideration of feedstock sharing/optimisation.

Moderador


Because most of the EFBs in Sarawak still not utilized, the availability is sufficient to fuel phase 2 of the development Frond utilization can wait until Phase 3 which is beyond 2020.

Sarawak Biomass Industry Development Plan2015

WHICH CHEMICALS DO WE CHOOSE? WE FOLLOW A 2-STEP APPROACH TO SELECT POTENTIAL CHEMICALS

40-50 chemical building blocks

derived from biomass

7 chemicals 3 chemicals

Technical feasibility of 2G technology in 3-5 years

1 Market opportunity and cost competitiveness compared to conventional or 1G chemicals

2

50

BIOMASS PRODUCT OPTIONS


SEVEN CHEMICALS PASSED THE FIRST SCREENING STEP

C1

Methanol Formic acid Methane Syngas

C2

Ethylene Ethylene oxide Ethyl acetate Ethanol Glycolic acid Ethylene glycol Acetic acid

C3

Lactic acid Acrylic acid Glycerol 3-Hydroxy-propionic

acid Propylene Epichlorohydrin

C4

n-Butanol 1,4-Butadienol Iso-butanol Iso-butene Methyl methacrylate Succinic acid

C5

Furfural Itaconic acid Xylitol Isoprene Farnesene Glutamic acid Levulinic acid

C6

Sorbitol Adipic acid Lysine FDCA Isosorbide Glucaric acid Citric acid Caprolactam

Cn

PHA Para-xylene Dicarboxylic acid Fatty acid derivatives

40-50 chemical building blocks derived from biomass 7 chemicals

C3

1,3-Propadienol Ethyl lactate Isopropanol n-Propanol Propylene glycol

Ethylene

Ethylene oxide

Furfural

Ethylene glycol

Propylene glycol

N-butanol

Xylitol

Source: IEA Bioenergy – Task 42 Biorefinery: Bio-based Chemicals, Value Added Products from Biorefineries, 2013

1

Many of the high growth chemicals such as lactic acid and succinic acid were screened out because of the early stage of 2G technology.

51



SECOND SCREENING PROCESS RESULTS IN 3 CHEMICALS2

Market opportunities and cost competitiveness

EthyleneStrong demand for bio-alternative from brand-owners but there is a major cost disadvantage compared to shale-gas based ethylene. The competitiveness of 2G to 1G ethanol as feedstock defines the cost position of ethylene from 2G sugars to sugarcane-based ethylene.

Ethylene oxide Ethanol derivative, see above

FurfuralCurrent production consists of a large amount of small capacity plants concentrated in China. There are limited new projects and a fear of overcapacity. Pulp mills could produce furfural as a side product but there is not enough demand for such new volumes.

Ethylene glycolOne of the fastest growing sugar-based chemicals. Strong demand from consumer brands, particularly for 2G feedstocks. Direct conversion of 2G sugars is a much shorter production route than the commercial sugarcane ethanol or fossil ethylene based technologies.

Propylene glycol

Same technology with ethylene glycol but lacking as strong demand from consumer brands. Bio-based market is still limited in size with only few commercial producers.

N-butanol

Bio-based production route shorter than conventional fossil based process, and may benefit from the recent shale-gas boom. N-butanol is a commodity chemical but also potential biofuel component. Market opportunities in chemical applications will be determined by the competitiveness with fossil-based n-butanol.

XylitolGrowing market as a sweetener and interesting potential as a chemical building block. Xylitol is a natural sweetener with less side-effects as artificial sweeteners, benefits for dental health, and lower calorific value than regular sugar.

52

Selected chemicals



2G PRODUCTION ROUTES ARE MUCH SHORTER COMPARED TO 1G PRODUCTION ROUTES FOR THE SELECTED CHEMICALS

2

53

Ethy

lene

gly

col

1G sugar

2G biomass

Conventional (fossil)

n-B

utan

ol

1G/2G biomass

Conventional (fossil)

Crude oil NaphthaEthylene Ethylene

oxide MEGEthane

Ethylene Ethyleneoxide MEGSugar Ethanol

Ethanol

MEGBiomass

Crude oil Naphtha Propy-lene

Butyr-aldehyde

n-ButanolPropane

Sugar/ biomass

n-Butanol

Xylit

ol

2G biomass

Selected routes

Ethanol

XyloseBiomass Xylitol

Sulphite1Biomass Xylose Xylitol

1 Pulp mill side-streams

Conventional chemicals are produced from fossil fuels (crude oil, natural gas, shale gas)

First-generation (1G) chemicals are produced from sugars and starch (corn, sugarcane, wheat)

Second-generation (2G) chemicals are produced from cellulosic biomass (corn stover, rice husk, other agriculture waste)



A COMMERCIAL SCALE MEG PLANT REQUIRES 400-500KT OF BIOMASS AND CAN BE INTEGRATED TO ETHANOL PRODUCTION

54

Biomass input400-500k dry tonnesEFB

Bio-ethanol75 kt

Monopropyleneglycol (MPG)30 kt

Monoethyleneglycol (MEG)30 kt3.6 bn PET bottles

End-use applicationsMain product

Chemical productsBiomass input

PET bottles

Polyester fibers

De-icing fluids

Electronic cigarettes

Tobacco products

Pharmaceuticals

Automotive fuel Hand sanitizer


Lignin Plant’s energy consumption/ sale as pellets


XYLITOL IS USED AS A SWEETENER AND IS TYPICALLY INTEGRATED TO ETHANOL PRODUCTION

55

Biomass input400-500k dry tons fronds Bio-ethanol

115 kt

Xylitol15 kt1.7 billion bottles of chewing gum

End-use applicationsMain product

Chemical productsBiomass input

Mint and chewing gum

Hand sanitizer

Chocolate

Toothpaste Sweetener

Automotive fuel

Lignin Plant’s energy consumption



N-BUTANOL HAS VARIOUS APPLICATIONS IN FUELS/ CHEMICALS AND REQUIRES SIMILAR BIOMASS INTAKE FOR COMMERCIAL SCALE PLANTS

56

Biomass input400-500ktEFB and woody biomass

Acetone15 kt

n-Butanol95 kt~1000 car/year at 15% blending

End-use applications Main productChemical productsBiomass input

Automotive fuel

PharmaceuticalsNail polish remover Paints and varnishes

Intermediate of other chemical products

Brake fluid for automotive Perfumes

Pharmaceuticals

Textile

Lignin Plant’s energy consumption



KEY CONSIDERATIONS FOR BUILDING COMPONENTS TO ENABLE SARAWAK TO MAXIMISE ITS POTENTIAL

• Cost Competitiveness of Production in Sarawak based on Market Pricing compared to Petrochemical Means of Production

• Inclusiveness of the entire value chain and participation opportunities for local companies of all sizes

• Products that have regional demand and mass market appeal


2017 2018 2019 20202021 and beyond

Palm Kernel Cake Bio Refinery Project

2G Sugars Refinery

2G BiobutanolPlant

Commissioning and Operations


Technical & Commercial Viability

Assessment

Startup

Feasibility Study Detailed Technical & Commercial Study

Site Decision

OperationsFormalise the business cases

Formalisebusiness cases

+

+

1st Plant Construction




MSW to biogas

Formalise the business cases



2G Bioethanol

Formalise the business cases

CATALYST PROJECTSNew developments on end markets and value chain

PKC BIO REFINERY PROJECT

Background:• AIM together with KNM Group (the Local EPCC player in plant manufacturing)

and Novozymes (the global leader in industrial enzymes) will be establishing afirst-of-its-kind PKC Bio-Refinery that produces 2nd Generation Bio-Chemicals(ethanol) and high value poultry feed for local consumption and export.

Objective:• Establish a PKC Bio Refinery plant making 2G Bio-

Chemicals (ethanol) and high value poultry feed forlocal consumption and export.

Poultry Feed Ethanol PKO

PKC Bio Refinery Plant

Palm Fruit Bunch

Palm Fruit

Palm Kernel Cake

Palm Kernel Oil

Palm Kernel Shell

Palm Kernel Additional PKO 2,500 tonnes

• SEA region has a net import of ethanol

• 15,000 tonnes

>75% is imported 42,000 tonnes

• PKC Bioethanol and Animal Feed Project in final phase of financial investment.

• Proposal submitted to Sabah Development Bank in October 2016 but rejected.

Estimated investment : USD 28m

Estimated Impact : USD 196m

Potential Current Status

Moderador


Malaysia is currently importing the high quality protein for poultry production, including soybean and corn. But with the development of the new and proven technology to produce enriched protein animal feed, fermentable sugars for fuels and chemicals production and extract more oil from PKC, the project will significantly benefited Malaysia in the future such as increasing the GNI, export income and higher-value job creation. Current Status: Sabah Development Bank has rejected the project developer (KNM and Novozymes) application for the state fund. To get the statement on the direction and decision from project developers on site selection.


Malaysia has already implemented a wide number of incentives to facilitate further industry development

61

Feed-In Tariff (FiT)1

Domestic Investment Strategic Fund (DISF)

2

Commercialisation of Research & Development Fund

4

Green Technology Financing Scheme (GTFS)

3

Techno Fund5

Intellectual Property Financing Scheme (IPFS)

6

Incentive

Grant

Grant

Grant

Grant

Grant

Pioneer Status7

BioNexus Status8

Business Start-up Fund (MTDC)

10

Investment Tax Allowances (ITA)

9

EPP 6 Developing Oleo Derivatives

11

Credit Guarantee Corporation (CGC)12

TaxIncentive

Incentive

Incentive

Grant

CAPEXIncentive

FinancingSupport


NBS2020 identifies specific opportunities and enablers to create high-value industries by mobilizing 30m tonnes biomass by 2020. AIM has facilitated NBS2020 execution through 1MBAS unit.

62

CRITICAL FACTORS TO ACHIEVE NBS2020, FACILITATED BY AIM’S 1MBAS UNIT:

Biomass usedMillion tonnes, dry weight

Energy

Wood products

6211% 31%Total:

0

5

10

15

20

25

30

35

202020152011

1%

1%

3%

1%

4%

6%

4%

9%

3%

9%

Share of total biomass available in given year

Fuels

Pellets

Biobasedchemicals

Biomass to Wealth

~14bln

~8bln

~9bln

~3bln

~2bln

▪ ~2% additional GNI impact▪ >60,000 new jobs▪ ~12% CO2e abatement

• Certification of Feedstock and Sustainable Consumption(Raw Biomass does not equate Feedstock)

• Sustainable Business & Operations Model with Integration in Mind as cross-industry collaborations increases viability.

• End to end development of Biomass Industry Value Chain from upstream to end market acceptance

• Mobilization of large volumes of biomass for high-value activities (logistics & infrastructure development) - Economic efficiencies when it comes to biomass aggregation

• Industry-led approach without government interference in selecting technologies based purely on Commercial Viability

• Participation of biomass (community and smallholders) owners in downstream value creation activities will reduce income gap and create sustainable feedstock supply

• Attract downstream technology owners and off-takers to scale up of new and interesting technologies through cost efficient operating environment

• Create a Vibrant Funding Landscape for Biomass Projects –Need to rely on pool of local and international funds as Commercial Banks are still warming up to Biomass

Moderador


Several technological and sociological issues pose a serious challenge to the development of the biomass-supply industry for the production of cellulosic biofuels: Developing a systems approach through which farmers, biomass integrators, and those operating conversion facilities can build a well-organized and sustainable industry that will address the relevant issues such as biofuel; soil, water, and air quality; carbon sequestration; wildlife habitat; rural development; and rural infrastructure—without creating unintended consequences through piecemeal development efforts. Determining the full life-cycle greenhouse gas emissions of various feedstock. Certifying the greenhouse gas benefits of different potential scenarios. Overcoming the perception that crop residues and similar materials are literally “trash” or waste products and therefore have little or no value for farmers.

5.LEARNINGS AND NEXT STEPS

• Key Learnings

• Ecosystem Development

• Next Steps

• Government and Industry should move parallel (Government should not just think like industry but also move like one) – no limitation on scope of involvement – cause when it comes to Industry there is none

• Clarity on Objective, Action Plan and constantly Review and Relook into progress through a proper Governance Structure

• Eco-system Approach and Sustainable (economic included) development of Green industry

• Sustainable Feedstock supply and Mobilisation (Cost Effectiveness)• Technology Deployment and Adoption Roadmap (Agnostic)• Biomass Project Funding and Access to these Funds• Off-take Market Development (Policy and Recommendations, G2G

and etc.)

• Drive the Bioeconomy with Passion and Urgency

THE CONCLUSION

Timothy OngSenior Vice President - Strategic Impact ProjectsHead of National Biomass Strategy Delivery Unit (1MBAS)-------------------------------------------------------------------------------Agensi Inovasi Malaysia (AIM)Malaysia’s National Innovation AgencyPrime Minister’s Department3501, Level 3, Quill Building 3Jalan Teknokrat 563000 CyberjayaSelangor Darul EhsanMalaysia

T : +603 8319 3116F : +603 8319 3499M : +6012 675 7586E: [email protected] W: www.innovation.my & www.nbs2020.gov.my

national biomass strategy -...

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