NNFCC Market Review        Feedstocks                                         Issue Seven, October 2012E                  ...
Policy                                              commodities to prevent extreme food price                             ...
Funding boost for Scottish LocalAuthorities                                                       MarketsSpeaking at the S...
In 2005 there were 2690 plants in Germanywith a capacity of 1109MW. By the end of2011 this had risen to 7621 plants with 3...
There was slow progress during the early part         Old crop soybeans in stock as at 1st Sept 2012of harvest as farmers ...
SITA UK sign contract to supply solid                Bio-based feedstock analysis projectrecovered fuel                   ...
improve efficiency, from methods used to               Also in the Newsharvest plants for energy production to thesystems ...
Wood Pellets (Delivered,   Ex-Farm Barley Straw      Ex-Farm Wheat Straw                   5% VAT), UK                (D10...
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NNFCC market review feedstocks issue seven october 2012


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Welcome to the October 2012 issue of our market review for biomass feedstocks. As the UK’s crop harvest draws to a close, it is not only remarkable for being two weeks later than normal and for producing the lowest yields seen since the 1980s but it could also play its part in causing a major shift in EU biofuel policy.

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NNFCC market review feedstocks issue seven october 2012

  1. 1. NNFCC Market Review Feedstocks Issue Seven, October 2012E Renewable Energy Association warning ach month we review the latest that “the speed & scale of proposals likely announcements and news from to destroy, not build on, sector innovations”. across the global crops, woodand wastes industries that supply bio- Crops intended for the first generationbased markets. This service is exclusively biofuels market are currently being grownfor our business members. on a relatively small area and must conform to strict sustainability criteria toForeword gain financial support within the EU.Welcome to the October 2012 issue of our Many of these crop-based biofuels can bemarket review for biomass feedstocks. As produced sustainably, with little impact onthe UK’s crop harvest draws to a close, it is food prices and offer significant potentialnot only remarkable for being two weeks for employment as well as greenhouse gaslater than normal and for producing the emissions savings. However, knee-jerklowest yields seen since the 1980s but it political decisions could derail the industrycould also play its part in causing a major and have a lasting and damaging effectshift in EU biofuel policy. on the environment.Talk of escalating food prices, land grabs Read on for all the latest sector news.and questionable carbon emissions, hasdamaged the reputation of biofuels. Now, Highlightsthe EU looks set to bring in drastic changesto the incentives and regulations governing Page 2 Policy Newsbiofuels to cap the use of food crops in Page 3 Markets Newstheir production. Page 4 Resource Availability NewsWhile this could be beneficial to thedeveloping advanced biofuels market it is Page 5 Contracts Newslikely to put an immediate and possiblypermanent end to the developing first Page 6 Research Newsgeneration biofuels market, with the Page 7 Feedstock Prices NNFCC Market Review, October 2012, Page 1 of 8
  2. 2. Policy commodities to prevent extreme food price swings on international markets. A drought in the US Midwest and the Black Sea regions sent grain prices to record highs this summer and raised concerns of a repeat of 2008, when a spike in food prices triggered riots in some countries. However, it is unclear how major producers such as the United States, Russia or China would welcome such an initiative during an economic downturn. Hollande also did notEU plans to limit use of biofuels from specify what food the reserves could includefood crops or where they could be located.Under new draft proposals, the use of biofuels Click here for more information.made from crops such as rapeseed andwheat is set to be capped at 5 per cent ofthe energy used in the EU transport sector in2020. With crop-based fuel consumptioncurrently standing at around 4.5 per cent,there will be little room to increase currentproduction volumes. Such a limit will throwinto doubt the EUs binding target to source10 per cent of road transport fuels fromrenewable sources by the end of the Source: Spiegeldecade, the vast majority of which wasexpected to come from crop-based biofuels. Biogas boom in Germany leads to modern-day land grabIn an attempt to make up the shortfall, theEuropean Commission wants to increase In Germany, subsidies for the biogas industryproduction of advanced biofuels made from have led to entire regions of the countryhousehold waste and algae. The Commission being covered by corn, and investors arehas proposed that the use of such advanced eagerly waiting for local farmers land to gofuels should be quadruple-counted within the for sale, according to German magazine DerEUs 10 per cent target. But with commercial Spiegel.production volumes expected to remain lowup to 2020, it is doubtful whether the goal can An average-sized biogas facility requiresbe met. 200ha of corn and needs to be constantly fed. This hunger for corn has transformed theClick here for more information. German landscape, according to Der Spiegel, who report that corn is now beingFrance pushes for strategic food grown on 810,000 hectares in Germany. This, says the magazine, has meant that for the firststocks to cool prices time in 25 years, Germany didnt produceOn Tuesday 11th September, French President enough grain to meet its own needs.Francois Hollande said that he was trying topersuade other world leaders to create Click here for more information.strategic stockpiles of agricultural NNFCC Market Review, October 2012, Page 2 of 8
  3. 3. Funding boost for Scottish LocalAuthorities MarketsSpeaking at the Scottish Waste andResources Conference, Scotland’sEnvironment Secretary Richard Lochheadannounced £1.2m of additional fundingwould be made available between now andApril 2013 to help councils meet theircommitments by the end of 2013.The new cash will be available specifically forfunding improvements to Household WasteRecycling Centres and for increasingcollections of glass from households. Thefunds will be administered by Zero WasteScotland, the Scottish Government’s deliverypartner. This is in addition to £5m already Palm prices fall to a three year lowmade available this year to supporthousehold food waste collections. Malaysian palm oil futures on the Bursa Malaysia exchange fell to the lowest levelsClick here for more information. since October 2009. At the close (02 October 2012) prices were down by 8.5 per cent fromCouncils snub weekly waste the benchmark December contract atcollections MYR2255/t ($739.10/t).Just one council has applied to a £250m fund The decline is due to slowing demand andset up by Communities Secretary Eric Pickles increasing stocks, as Malaysia sees a seasonalto help them switch from fortnightly to weekly peak in production. Also weighing on prices isrefuse collections. The fund, which also the general softening of soyabean markets,supports initiatives that offered rewards to as the harvest progresses at a faster thanresidents for recycling, closed to new expected pace in the US.submissions in August. Palm oil is currently trading at a $376.96/t discount to CBOT soya oil, a drop of 25 per166 bids were submitted altogether, but cent in a week. This level is the largestaccording to Materials Recycling World discount between the two oils since themagazine only Stoke-on-Trent City Council financial crisis began in 2008, but is unlikely toapplied for help to switch to weekly be sustained in the longer term given the tightcollections. Five further councils bid for soyabean supply situation in 2012/13.support to help them in some areas where“collections are challenging", but they are Click here for more information.retaining fortnightly collections for most oftheir residents. German biogas growth grinds to haltHowever, the fund has proven popular with Rising corn prices and uncertainty about thecouncils who want to change their rubbish funding of biogas plants has halted thecollections in order to promote recycling, with growth of the biogas industry in Germany160 councils having applied for this purpose. according to German Agricultural Society, Deutsche Landwirtschafts-Gesellschaft (DLG).Click here for more information. NNFCC Market Review, October 2012, Page 3 of 8
  4. 4. In 2005 there were 2690 plants in Germanywith a capacity of 1109MW. By the end of2011 this had risen to 7621 plants with 3185MW capacity.However, DLG warn that by the end of 2013there will be just 7895 biogas plants with agenerating capacity of 3312MW; an increaseof less than 4 per cent in two years.Click here for more information. Defra reveal final 2011-12 supply and demand estimatesResource Availability Wheat: Stocks at the end of June 2012 are set at 1.50Mt, 31kt below May’s estimate and 3AD driving organics recycling sector per cent below 2010/11. The Defra stocksgrowth survey showed lower stock was held on-farm in England and Wales and by UK merchants,WRAP’s latest survey of the UK organics ports and co-ops at the end of June 2012recycling industry shows that growth in the compared with June 2011.number of permitted AD sites (48 in 2010) sawthe total input of organic waste processed via Barley: Stocks at the end of June 2012 are setAD top the one million tonnes mark. at 0.94Mt, 124kt above May’s estimate and 70kt above 2010/11. The Defra stocks surveyAt the same time, composting input volumes showed higher stock was held at the end ofshowed some growth with a total input of 5.44 June 2012 than June 2011, particularly by UKmillion tonnes in 2010, up by 3.9 per cent on merchants, ports and co-ops.the 2009 survey. Maize: Full season imports were reported atAlthough agriculture remains the largest 0.99Mt, 142kt higher than May’s estimates asmarket for compost, increasing volumes are imports exceeded expectations in the finalalso going to higher value uses such as quarter of the year. Total usage was higher asprofessional horticulture and landscaping, a result with more maize used as animal feed.with indications that PAS 100 certification is Closing stocks were set at 149kt, 65kt aboveenabling producers to obtain higher prices the May estimate and 38kt above 2010/11.from these markets. Click here for more information.The study shows that 7.2 million tonnes oforganic waste was recycled during this UK harvest one of the latest in recentperiod, compared to just over six milliontonnes in 2009 and there are now over 1500 yearspeople employed in the sector. Combinable crop harvest 2012 is finallyClick here for more information. drawing to a close and will go on record as one of the latest harvests in recent years. It started in late July, around 2 weeks later than normal due to cool temperatures delaying crop maturity. NNFCC Market Review, October 2012, Page 4 of 8
  5. 5. There was slow progress during the early part Old crop soybeans in stock as at 1st Sept 2012of harvest as farmers struggled with slow totalled 4.6Mt, down 21 per cent from 1st Septmaturing crops, high straw volumes and 2011. Consumption between June anddifficult field conditions, along with continuing August 2012 was 13.6Mt, up 23 per cent fromunsettled weather, particularly in the west the same period last year. Prices haveand north. remained fairly stable following the report with only slight increase (0.2 per cent), tradingA more settled period of weather in early Sept at $578.20/t.across the country coincided with the peaktiming for wheat and spring barley harvest Click here for more information.and allowed more rapid progress, althoughcool air temperatures shortened harvest daylength for some. ContractsYields of winter barley and oilseed rape wereclose to the 5 year average, and springbarley slightly lower than average. However,wheat yields were badly affected by diseaseand low sunshine during grainfill resulting inthe average UK yield 10-15 per cent belowthe 5 year average. Most quality measureswere fine, but cereal specific weights weremuch lower than normal and frequentlybelow minimum market specification.Click here for more information.US grain stocks lower than anticipated Terravesta seeks Miscanthus growersUS stocks of maize as of 1st Sept 2012 were25Mt, down 12 per cent from 1st Sept 2011 Contract Miscanthus growers are beingand lower than trade expectations. Prices sought by newly launched energy pelletreacted by rising around 3 per cent, trading supplier Terravesta. The company, whichat $291.32/t on the CBOT Dec 12 contracts earlier in the year processed its first(28th Sept). Miscanthus cane into power-generating pellets at its plant in Kimbolton,Consumption between June and August 2012 Cambridgeshire, is looking to establishwas 54.8Mt, compared with 64.5Mt during the contract growing arrangements with farmers.same period last year. This suggests someearly demand rationing, particularly in the Index-linked contracts ranging between fivecontext of drought stressed pasture which and 10 years are available, backed up bycould have been expected to increase feed secure end-user supply contracts. Accordingdemand. to the company, they will offer up toWheat in stock on 1st Sept 2012 was 57.25Mt, £68/tonne for Miscanthus delivered in Hesstondown 2 per cent from a year ago. Again, this bales and containing less than 16 per centis on the lower side of pre-report expectations moisture. Any growers interested in gettingand prices have risen 2.5 per cent to $322.2/t involved must first be accepted on to Naturalon the CBOT Dec 12 contract (28th Sept). England’s Energy Crops Scheme.Consumption between June and August 2012was 24.7Mt, up 27 per cent from the same Click here for more information.period a year earlier. NNFCC Market Review, October 2012, Page 5 of 8
  6. 6. SITA UK sign contract to supply solid Bio-based feedstock analysis projectrecovered fuel receives green lightRecycling and resource management The National Science Foundation is providingcompany, SITA UK, has signed a three-year a €3.67m grant to fund a team of researchers,contract to supply 180,000 tonnes of solid led by Michigan Tech University, to visit andrecovered fuel to CEMEX in Latvia. assess the viability of bioenergy projects in North and South America.The fuel will be produced by processingresidual commercial waste in a new £6 million Research will focus on a US cellulosic ethanolpurpose-built facility at Ridham Docks in Kent. facility, eucalyptus used for biodiesel inThe facility will process up to 50 tonnes of Argentina and the impact of using forest landmaterial per hour, said the company. Once repurposed for soyabeans and sugarcane inprocessed, the solid recovered fuel material Brazil.will be used as a fossil-fuel replacement atCEMEX’s cement production facility in The team will produce hydrology reports,southern Latvia. The first shipment will be sent gather community feedback and assess localout in September, say SITA. economic impacts, before analysing the data to enable decision-makers to betterClick here for more information. understand current bioenergy production approaches. Click here for more information.Research Nocturnal photosynthesis could hold biofuels key Newcastle University is taking part in a five- year project to explore biofuel potential in plants growing in harsh environments. TheNNFCC join NIAB Innovation Farm £8.8m project, funded by the US Departmentpartnership to promote market for of Energy, will look at the geneticplant-based materials mechanisms of nocturnal photosynthesis, a process displayed by some desert plants.NNFCC have joined the NIAB Innovation Farm By taking in carbon dioxide at night certainproject, which is part funded by the European plants, like the agave and prickly pear, buildRegional Development Fund and is delivered up a store of carbon which is used to powerin partnership with academics and industries photosynthesis during the day.involved in the development and productionof plant derived or plant based materials. Click here for more information.This knowledge base will allow NIAB to offersmall businesses access to experts throughout £2 million bioenergy innovationthe pipeline and a source of potential scheme open to applicationscollaborators for funding proposals. Sustainably sourced bioenergy couldClick here for more information contribute around 8-11 per cent to the UK’s total primary energy demand by 2020. However, more investment is needed in research, development and demonstration projects to drive forward innovation and NNFCC Market Review, October 2012, Page 6 of 8
  7. 7. improve efficiency, from methods used to Also in the Newsharvest plants for energy production to thesystems used to generate power from thesesources.Many British wetland areas are currentlymaintained to provide an environment forwildlife but the harvested material from thesesites could also be used to produce energy.Now the Government has launched a £2mscheme aimed at encouraging innovation inbioenergy production on wetlands.Click here for more information. Source: ReutersNew choice of biogas feedstock Biogas plant responsible for turningcrops French honey bluePlant breeders, like Syngenta, are developing Bees at a cluster of apiaries in northeasternvarieties aimed specifically at the biogas France have been producing honey inmarket – these include improved "high mysterious shades of blue and green,energy" maize as well as new lines of beet alarming their keepers.and cereal crops which can be grown onland unsuitable for maize. Mystified, the beekeepers embarked on an investigation and discovered that a biogasEnergy production of the feedstock crops is plant 4 km away has been processing wastethe key to maximising biogas production, as from a Mars plant producing M&Ms, bite-Syngenta’s Nigel Padbury explains: sized candies in bright red, blue, green,“Concentrated power, in the form of high yellow and brown shells.levels of maize metabolisable energy, is theroute to optimising performance.” Click here for more information.Click here for more information.Feedstock PricesArrows indicate rise (↑), unchanged (–) or fall (↓) from previous month. ENDEX Wood Pellets Date €/tonne Nov-12 131.90 (↑) Dec-12 132.87 (↑) Jan-13 132.41 (↑) Q1 13 135.50 (↑) Q2 13 136.31 (↑) Q3 13 135.88 (↑) For details on European wood pellet futures prices see www.apxendex.com NNFCC Market Review, October 2012, Page 7 of 8
  8. 8. Wood Pellets (Delivered, Ex-Farm Barley Straw Ex-Farm Wheat Straw 5% VAT), UK (D1000), UK (D1000), UK Date £/tonne £/tonne £/tonne Oct 12 205.00-266.25 (– - –) 48.00-60.00 (– - –) 37.00-48.00 (↓ - –) For details on UK wood pellet spot prices contact enquiries@nnfcc.co.uk For details on straw spot prices see www.fwi.co.uk LIFFE MATIF MATIF MATIF CBOT CBOT CBOT Wheat Wheat Rape- Malting Wheat Maize Soybean seed BarleyDate £/tonne €/tonne €/tonne €/tonne $/tonne $/tonne $/tonneNov 12 201.50 (↓) 262.00 (↓) 483.75 (↓) 244.00 (↓) - - 569.47 (↓)Dec 12 - - - - 317.53 (↓) 292.13 (↓) -Jan 13 203.50 (↓) 261.00 (↓) - 254.00 (↓) - - 569.19 (↓)Feb 13 - - 484.75 (↓) - - - -Mar 13 203.50 (↓) 259.75 (↓) 256.00 (↓) 321.75 (↓) 292.22 (↓) 552.66 (↓)May 13 206.00 (↓) 258.25 (↓) 480.50 (↓) 257.25 (↓) 322.03 (↓) 289.96 (↓) 533.28 (↓)Jul 13 208.15 (↓) - - - 309.72 (↓) 287.50 (↓) 528.23 (↓)Aug 13 - - 447.75 (↓) - - - 519.23 (↓)Sep 13 - - - - 311.10 (↓) 258.27 (↓) 504.99 (↓)Nov 13 173.50 (↓) 229.75 (↓) 446.00 (↓) 259.00 (↓) - - - For details on futures prices see www.hgca.comOther biomass feedstock prices are available upon request, simply contact enquiries@nnfcc.co.uk. Credits and Disclaimer NNFCC Market Review is edited by Dr Matthew Aylott for NNFCC members. Feedback is welcome. The Review has been compiled in good faith and NNFCC does not accept responsibility for any inaccuracies or the products or services shown.NNFCCThe Bioeconomy Consultants NNFCC, Biocentre, Phone: +44 (0)1904 435182 York Science Park, Fax: +44 (0)1904 435345 Innovation Way, E: enquiries@nnfcc.co.uk Heslington, York, Web: www.nnfcc.co.uk YO10 5DG. NNFCC Market Review, October 2012, Page 8 of 8