upm is redefining biofuels - spci leads the integration of bio and forest ... hart global biofuels...
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UPM BIOREFINERY World Biorefinery Conference 2012, Jönköping, Sweden UPM Biofuels / Kosti Mokkila
May 2012
| © UPM
Materials and energy efficiency
Renewable and recyclable products
Innovation and new businesses
Resource scarcity
Power shift in global economy
Climate change
Digitalisation
World is changing Biofore growth
and competitiveness
FOREST OF NEW OPPORTUNITIES
The Biofore Company -
UPM leads the integration of bio and forest industries
into a new, sustainable and innovation-driven future May 2012 2
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RENEWABLE FUELS MARKET
Four megatrends drive demand for biofuels
3
Energy security Climate change
Higher energy prices Rural development
Biofuels are an effective way to increase
energy security, reduce dependency on oil
imports
Together with improving fuel efficiency,
biofuels are the most important low-cost way
of reducing CO2 emissions in the transport
sector
Biofuels can create new sources of income
for rural areas. Increased competition for
arable land has raised awareness of
sustainability issues
Increasing cost for the marginal barrel of oil
(ultra deep water drilling, oil sand etc.)
supports demand for substitutes including
biofuels
May 2012
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RENEWABLE FUELS MARKET
Public policy responds to megatrends –
also outside Europe
Biofuels are needed to fight megatrends
Long-term, regulation support not needed to drive market creation as competitiveness of
biofuels improves with more mature technology and increasing fossil fuel price
Stable regulatory environment and rewarding of investors needed to drive investments
Current
regulation
favourable
Major
regulation
changes
unlikely
US (Renewable fuel
standard): Biofuels are
expected to account for
about 20% of annual fuel
consumption by 2022
EU (Renewable energy
directive): Biofuels
account for 10% of
energy content by 2020
Other countries: More
than 50 countries have
adopted blending
targets or mandates
May 2012 4
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RENEWABLE FUELS MARKET
Demand for biofuels expected to grow
Global biofuel demand is expected to grow
by 9% annually over next 10 years
European market is driven by biodiesel –
robust growth expected
66
104
15666
0
50
100
150
200
19
2008
Global biofuel
demand (Mtons)
+9%
2020
195
39
2015
132
28
2010
84
Share of
traffic fuels 6% 8% 10%
Ethanol
(cons.)
Biodiesel
(cons.)
Total
(cons.)
Total (IEA)
CAGR, 10-20
(consensus range)
7-11%
7-16%
7%
8-9%
10
30
50
Biodiesel demand, EU-27 (Mtons)
40
20
0
+7%
2020
22
2015
15
2010
11
National action plans (NREAPs)
Consensus range
753
0
20
40
60
Ethanol demand, EU-27 (Mtons)
+10%
2020 2015 2010
May 2012 5
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RENEWABLE FUELS MARKET
Demand for biofuels is growing fast
6 May 2012
(Mtonnes)
+7%
22
15
DEMAND OF BIODIESEL IN EU • Global demand will exceed supply in the next few years
• Demand in EU grows by approx. 7% yearly
• EU’s target by 2020 is – to cut greenhouse gas
emissions by 20%
– to have 10% of renewable fuels in road transport (Finland 20%)
• UPM’s markets are in the EU
11
National action plans (NREAPs)
Consensus area
50
40
30
20
10
0 2010 2015 2020
Source: Hart Global Biofuels Outlook 2010 – 2020
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RENEWABLE FUELS MARKET
EU’s Renewable Energy Directive favours
advanced biofuels
7
• EU’s Renewable Energy Directive (RED)
favours advanced biofuels
• Advanced biofuels which are produced
from lignocellulose, waste and residue
based raw materials are double counted
when calculating renewable target
• In practice, 5% of advanced biofuels
would be regarded as 10% when
calculating the renewable target
Source: Directive of the European Parliament and of the Council on the Promotion of
the Use of Energy from Renewable Sources (RED)
May 2012
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Wood raw material is the basis of many different businesses
8 May 2012
Bark and branches to
BTL (next generation
biodiesel) and energy
Fibres to pulp,
paper and composites
Lignin and fibrils
to new
products
Extractives
to Biodiesel Logs for sawn goods
and plywood
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UPM BIOFUELS
UPM’s biofuel strategy
9
Significantly less greenhouse gas
emissions
Advanced biofuels
Products are drop-in advanced biofuels – ready components for car fuel tanks
Wood based, non-food raw
materials
May 2012
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UPM BIOFUELS
Biofuels concepts
SUGAR &
STARCH
Sugar
cane Corn Wheat
Rape Palm
Fermentation
Esterification
Hydrogenation
Gasification +
FT-synthesis
Hydrolysis +
fermentation
Soy VEGETA-
BLE OILS
1G
CO
NV
EN
TIO
NA
L
2G
AD
VA
NC
ED
Tall
oil
Waste
fat Waste
Straw (Energy)
wood Pyrolysis
oil
RESIDUES
& WASTE
LIGNO-
CELLULOSE
Bioethanol No1 in production
volumes in the world
Biodiesel No1 in production
volumes in Europe
Bioethanol No comm. production
Advanced
biodiesel Few comm. plants
• Limited fuel properties
• Maximum blending 6 % in energy content
• Low sustainability
• Simple processes
• High quality fuels that complement motors (ethanol quality similar to 1G)
• High sustainability
• Advanced processes
FEEDSTOCK PROCESS PRODUCT PROPERTIES
UP
M F
OC
US
10 May 2012
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GROWTH OF
BUSINESS
EXPANDING
BUSINESS
FIRST STEPS
OF BUSINESS
UPM BIOFUELS
UPM’s biofuel vision and concepts
HYDROTREATMENT
Liquid raw materials Tall oil
First investment Lappeenranta biorefinery
THERMAL CONVERSION
Energy wood Gasification (BTL) / Pyrolysis
BTL investment Strasbourg or Rauma
FUTURE DEVELOPMENT New technologies, processes and innovative raw materials.. UPM’s own R&D activities in Lappeenranta and co-operation with strategic partners.
11 May 2012 BTL = Biomass-to-liquid
R&D = Research and Development
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UPM BIOFUELS
UPM's biofuels significantly reduce
GHG emissions compared to fossil fuels
12 May 2012
*Source: Directive of the European Parliament and of the Council on the
Promotion of the Use of Energy from Renewable Sources
0
10
20
30
40
50
60
70
80
90
100
Fossil diesel* Rapeseed biodiesel* Palm oil biodiesel(with/without methane
capture)*
UPM's biofuels
%
EU 2011
EU 2017
EU 2018
(new plants)
62
81
44
20
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UPM BIOFUELS
UPM Lappeenranta biorefinery
13
• Commercial scale industrial investment
• Total investment of appr. 150 MEUR
• Production 100 000 tonnes/a of advanced biodiesel
• Production starts in 2014
• Employes approx. 200 persons directly and indirectly
• Profitable investment
• Know-how and volumes in raw material procurement and logistics
• Mill integrated synergies in energy and infrastructure
• High quality product
• UPM’s innovative technology (technology partner Haldor Topsøe)
May 2012
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UPM BIOFUELS
Crude Tall Oil (CTO)
14
• Tall oil is a residue of pulping process
• Contains the extractive components of wood (gum, kåda)
• Distillation derivatives
– Tall Oil Fatty Acid TOFA
– Tall Oil Rosin Acid TOR
– Tall Oil Pitch TOP
• Manufactured by acidulating raw sulphate soap separated from
black liquor
• Yield 20−50 kg CTO/ t pulp
• Global production now > 1 500 000 t CTO/a
• Additional soap potential exists
• Utilization of low grade CTO
May 2012
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UPM BIOFUELS
Chemical reactions in hydrogenation
16
• Removal of oxygen, sulphur and nitrogen –COOH –CH3
• Double bond saturation –CH=CH– –CH2–CH2–
• Aromatics to cyclic hydrocarbons (HC’s)
• Cyclic HC’s to linear HC’s
• Isomerization (linear HC’s to branched HC’s)
• Cracking (lights / gas formation)
• Reactions taking place in random order and at random yields
May 2012
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UPM BIOFUELS
Technology concept developed in
UPM Research Centre
• UPM has developed hydrotreatment process in
Lappeenranta biorefinery development centre
• R&D focus
- Technology development: hydrotreatment, feed
pretreatment process, reaction kinetics
- Proof of concepts in lab, pilot and bench scale
- Raw material mapping and feasibility evaluation
- End-product development
• Hydrotreatment piloting is done in co-operation
with technology partner Haldor Topsoe
17 May 2012
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• 2nd generation
biodiesel fully
compatible with
current diesel motors
• 80% reduction in
greenhouse gas
emissions
• High energy content
• No blend wall issues
• Technology based on
UPM innovations
• Efficient use of raw
material
• Integrate synergies
• Industrial
infrastructure
• Crude tall oil, a
residue from pulp
production
• Steady supply
partially from own
sources
• Outside food value
chain
• No indirect land-use
change
UPM BIOFUELS
Attractive growth investment based on
UPM’s competitive advantages
18
Competitive
raw material
Efficient
production process
High quality
product
| © UPM May 2012
| © UPM
SUMMARY
Ingredients for new business creation
19
Favourable
Megatrends
Profitable business
model
Support from top
management
with clear state
of will
Know-how, innovation and right partners
Sustainable
chain of
production
Good products and
growing markets
Courage to think
differently
May 2012
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• UPM will be a big player in advanced biofuels market,
revenue targeting > 1 billion €/a
• Getting really big volumes of advanced biofuels to
market necessitates effective new technologies in
converting lignocellulose to advanced biofuels
• UPM is actively developing new production technologies
with the forefront technology vendors and research
companies
Future
May 2012