CKC 2012

BIOENERGY LEADERSHIP IN BC

Opportunities for International Collaboration

Michael Weedon, Executive Director

August 6

2012

2

Agenda

Background

BC Leadership in Bioenergy

Future Prospects

Fossil Energy Trends and Outlook

Global Bioenergy Investment

International Collaboration Developments

Conclusion

3

BC Bioenergy Network - History and Mandate

History

• Founded March 30, 2008

• Not-for-profit society with an independent industry/research board

• Bioenergy focused mandate

• $25 million grant

• Funders: BC Ministry of Energy Mines and Petroleum Resources and

Ministry of Environment

Mandate

• Maximize the value of BC’s biomass resources

• Develop mission-driven research, development and demonstration

projects

• Reduce GHG emissions

• Network and partner in BC, Canada, and internationally, to advance

BC’s bioenergy sector

• Lever funding to support BC-focused bioenergy technology and

applications

4

What We Do

Major Capital Investments

Capacity Development

Education and

Advocacy

Innovation

Partnering

Competitiveness

Environmental

Benefits

5

Tech Spotlight on Bioenergy in BC

Building the next generation of innovation

6

Our Results

• 13 Technology Development & Demonstration Projects

• 11 Capacity Building Projects

• $13.2 million committed

BCBN Investment

Partner Investment $13.2

$65.0

Total Value of Funded Projects

$78.2 million

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Technology Development and Demonstration Large Projects - Categorized by Primary Value Stream Over Time

Investment Size Equals Size of Bubble

-5 0 5 10 15 20 25

Municipal Solid Waste Anaerobic Digestion

Solid Wood Residues

Pulp and Paper Residues

Harvesting and Densification

Heat and Power Systems

Wastewater

Existing Landfill Waste

Solid Waste

Agriculture Residues

Cedar Road Biogas to Electricity

Nexterra CHP Gasifier 2

Nexterra CHP Gasifier 1 Elemental Anaerobic Digestion

ICC Organics to Biodiesel

Lignol Biochemical 1

Lignol Biochemical 2

Bakerview Ecodairy Anaerobic Digestion

UBC Gasifier Research

Terasen Biogas to Pipeline

$1,500,000

$200,000

MicroSludge Pulp

Anaerobic Digestion

Fraser Richmond Soil and

Fibre High Solids AD

Cedar Road

Phase 2

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BC Advantages for Bioeconomy Development

• entrepreneurial companies and innovation support

• creative communities

• abundant biomass

• visionary policy leadership and support

Creates

• jobs + economic + social development

• environmental benefits

• clean energy exports

Challenges

• scarcity of capital for technology development and large cap ex

• cheap and abundant hydro electricity and natural gas

• policy uncertainty – agenda shifting to jobs and families

• early stage of development - lack of information and sharing of best practices

• lack of developed supply chain

A Huge Challenge: Partnering is Essential

Developing BC’s Bioeconomy

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Bioeconomy Opportunities in BC

The emerging bioeconomy relies on:

• development

• integration

• best utilization of feedstocks

Low cost feedstocks include:

• municipal biosolids and gases

• agricultural animal and crop waste

• solid wood residues

• pulp and paper sludges

• forest residuals

Utilization of existing waste streams holds the highest immediate potential

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A Bright and Exciting

Future and Energy Revolution is Underway

• Canada is blessed with an abundance of

natural resources including fossil fuels and

biomass resources.

• In the low fossil fuel price environment

experienced most of this century, save for

the last ten years, these biomass resources

have been largely underutilized.

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Average Price of Oil and Coal US $ Per

Gigajoule

$0.00

$5.00

$10.00

$15.00

$20.00

30 20 10 5 3 1

Oil

Coal

Years

12

Recently Presented at a Tides Canada Webinar

13

1930

14

2011

15

2011

16

2014?

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Net Energy Cliff

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The Game is Changing

• Biorefining technologies on the shelf for sixty

years are now being developed and deployed,

and new technologies and scientific

knowledge are being discovered to

revolutionize the energy industry.

• Biorefining opportunities will abound in

biomass rich jurisdictions, a blessing which

Canada can capitalize upon though

sustainable and responsible development.

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Coal in the United States is at a Crisis Point!

• Public utility commissions have rejected, or

the companies have themselves, cancelled or

postponed 153 plants.

• The plant cancellations amounted to $243

billion in investment decisions being reversed,

or disinvested, from coal in four years.

As You Sow, June 2011

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With the Price of Fuel and Electricity Going Up

There will be numerous

Opportunities

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CIBC World Markets, Don Roberts, Vice

Chairman, (with permission)

Following are five slides recently presented from

his presentation NSERC Bioconversion

Network Pretreatment Workshop UBC,

Vancouver, Canada, June, 2012

Other EMEA

1%Other AMER

5%

Brazil

7%

Other ASOC

7%

United States

9%

India

11%

China

23%

Europe

37%

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Global Asset Financing in Biomass and Waste-to-Energy (2005-2011)1

1 Source: Bloomberg New Energy Finance., CIBC World Markets

Cumulative Growth in Biomass and Waste-to-Energy Asset Financing1

Global Biomass Investment Trends

Global investments in energy plants using biomass (i.e., solids)have hovered around $9-10 B/year since 2007 – much more consistent than for biofuels (ie., liquids).

Europe is the leader, followed by China.

China’s NDRC is targeting to increase biomass power from <6GW in 2010 to 24 GW by 2020 (estimated cost ~$70 billion

EU expects to double biomass capacity by 2020 to ~26 GW (~$50 Billion)

Brazil likely to spend at least $55 billion for power & cellulosic fuels to use wood & sugar cane biomass

Conclusion? If the official targets are met, expect upward pressure on biomass prices.

$6.19B

$9.71B$10.13B

$12.20B

$10.99B$11.58B

$8.91B

2005 2006 2007 2008 2009 2010 2011

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Global Biomass Shipping Routes

Note: Dotted cycles represent the major demand centres; the strength of the arrows is relative to their importance as trading routes.

Source: Bloomberg New Energy Finance, IEA, CIBC World Markets

Europe & Asia are the Centres for Biomass Demand

Europe is the biggest demand region, but Asia is growing quickly. In 2011, wood pellet capacity in the U.S. exceeded that in Canada

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Biomass demand for co-firing in Europe is expected grow to approach 14 million tpy by 2014 – a 40% increase over 2010. Three biggest demanders are Drax, RWE and GDF Suez.

Note: using installed capacity rates in the UK, Netherlands, Poland and Denmark – this graph accounts for 83% of installed capacity. “Other” biomass includes

palm kernel shells, energy crops and other biomass sources.

Source :Company reports, Bloomberg New Energy Finance, CIBC World Markets

Biomass Demand For Co-Firing by Parent Company 2011 (million ODMT)

European Demand for Bio-Energy

LEVELISED COST OF ELECTRICITY Q1 2012 ($/MWH)

Source: Bloomberg New Energy Finance, CIBC World Markets Inc.

Note: Carbon forecasts from the Bloomberg New Energy Finance European Carbon Model with an average price to 2020 of $33/mtCO2. Coal and natural gas prices from the US Department of Energy EIA Annual Energy Outlook 2011 and internal forecasts. Percentage change represents change from Q4 2011.

• Wide range of costs, depending on local conditions & scale.

• With currently commercial technologies, bio-electricity is generally in the bottom half of the cost curve, but its relative cost position will likely deteriorate going forward

• Biomass is different than most renewable sources of energy - provides base load power, and optionality.

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1.77

2.28

0.53 0.53

0.70

1.01

4.16

2.55

1.781.78

1.41.4

3.45

4.44

0

2

4

6

8

10

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Landed costs of Wood

Pellet

Landed costs of Torrefied

Pellet

Savings landed costs Avoided cost at utility Total saving

Logistics

Financial cost

Process cost

Cost of Biomass

point

Cost Comparison Based On The Same Physical Value Chain USD/GJ

* Feedstock cost includes: delivered chipped cost of whole logs for wood pellet; whole logs and logging residues for torrefied pellet assuming 50% moisture content

** Process cost includes: electricity, labour, SG&A, binding agent, royalty and other operating costs *** Financial cost includes: depreciation, interest on debt **** Logistics includes: the cost of transportation and handling from plant to power plant

11.07 $/GJ 9.30 $/GJ

3.71 $/GJ

Savings

If you want to invest in solid biofuels, best to go opt for torrefied as opposed to conventional pellets. It results In Significantly Lower Costs In The Entire Value Chain ~20% less.

O&M cost

Investment cost

Torrefied vs Conventional Wood Pellets

Assumption: Both plants are located in the south eastern region of the United States, are located 100 km from a deep sea port, and the pellets are shipped to Rotterdam.

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International Collaboration Developments

BC and Korea • BC Bioenergy attended ENVEX 2011 B2B Matchmaking

Meetings in Korea, June, 2011

• At CKC 2011 in BC Opportunities for bioenergy collaboration

were explored, August, 2011

• Canada – Korea Energy Forum, BC, December, 2011

• Canada Starts Here: BC-Korea Bioenergy Collaboration/

KIST Letter of Intent with BC Bioenergy signed, March,

2012, BC

• BC Ministry of Jobs Tourism and Innovation (JTI) active in

Korea

• UBC and KIST sign MOU on Premier’s Mission, Korea, May,

2012

• International Bioenergy Conference and Exhibition in Prince

George, BC, June, 2012 with Korean utility attendees and

speakers

• KETEP and JTI and BC Bioenergy begin MOU discussions

• CKC 2012 Renewable Energy Forum, BC, August, 2012

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Conclusion

• Continued commitment and resources are needed

• Conventional energy is getting more costly and risky

• Capital is being invested heavily in renewable biomass

• Partnering is essential: development, financing, markets

• International collaboration is underway

• A race for clean sustainable prosperity is on

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Thank you

Michael Weedon

BC Bioenergy Network

www.bcbioenergy.ca