2013 socio economic prospects of advanced biofuels voetmann wfes

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I will be sharing Novozymes' view on bioenergy and sustainability today at WFES and wanted to share some key data on biomass availability, the transportation context and some regional data.

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2013 socio economic prospects of advanced biofuels voetmann wfes

  1. 1. THE FUTURE IS BIOBASED:SOCIO-ECONOMICPROSPECTS OFADVANCED BIOFUELSWFES
  2. 2. NOVOZYMES IN BRIEFWORLD LEADER IN BIOINNOVATION WE GREEN THE WORLD:  Enzymes save energy, chemicals, raw-materials and water  In 2011, Novozymes helped customers save 45 million tons of CO2 BASED ON INNOVATION:  14% of sales re-invested in R&D  7000 patents granted or pending
  3. 3. LEADING THE WAY IN ENABLING TECHNOLOGY FOR ADVANCED BIOFUELS  World leader in biofuel enzymes  Global R&D focus on advanced biofuels  Broad partnership strategy – we are working on many feedstocks and technologies  More than 150 people dedicated to advanced biofuels3 Novozymes R&D locations
  4. 4.  Transport is the second largest energy user and by far the largest oil user By 2050 there will be an estimated 2.3 billion additional cars worldwide – 1.9 billion of these in developing countries Transport continues to be the fastest growing CO2 emitter Source: International Energy Agency: ”World Energy Outlook”, 2011 and International Monetary Fund: ”Mass Car Ownership in the Emerging Market Giants”, 2008
  5. 5. WHY WE NEED BIOFUELS 2010Total number of cars is 760.000.000 Source for total number of cars: IMF World Economic Outlook (April 2008); Chamon, Mauro and Okawa in Economic Policy (April 2008) Source for distribution of cars: Source: Various statistics found on WWW – distribution is only indicative of development.
  6. 6. WHY WE NEED BIOFUELS 2050Total number of cars will be 2.900.000.000 Source for total number of cars: IMF World Economic Outlook (April 2008); Chamon, Mauro and Okawa in Economic Policy (April 08) Source for distribution of cars: Source: Various statistics found on WWW – distribution is only indicative of development.
  7. 7. THIS IS A POWER PLANTPOWER FOR FOOD, FEED AND FUEL FOOD, FEED AND FUEL ADVANCED BIOFUELS ELECTRICITY AND FEED
  8. 8. THE TECHNOLOGY IS READY ANDPRODUCTION IS BEING SCALED UP 2010 2011 2012 2013 2014 US Demonstration scale Commercial scaleEurope Demonstration scale Commercial scaleChina Pilot scale Demonstration scale Commercial scaleBrazil Pilot scale Demonstration scale Commercial scale
  9. 9. *Source: Bloomberg New Energy Finance, “Moving towards a next-generation ethanol economy” 2012
  10. 10. BNEF STUDY BASED ONTHE AGRICULTURAL POWERHOUSESUnited EU-27States China Mexico India Brazil Argentina Australia G20 countries not included: Canada, Indonesia, Japan, Russia, Saudi Arabia, South Africa, Republic of Korea, Turkey
  11. 11. AGRICULTURAL RESIDUE AVAILABILITYIN THE 8 SELECT REGIONS Billion dry tons, 2030  A maximum of 17.5% is Power 2,5% Husbandry assumed to be available for 5% advanced biofuel production  Collecting only 25% of Advanced agricultural residue is a biofuels 17,5% conservative methodology that takes into accounts Total = 4,6bn technical and ecological constraints Residue left on field 75%  This purposefully aim to preserve soil quality and are in the low-to-medium range of comparable studies Source: Bloomberg New Energy Finance, “Moving towards a next-generation ethanol economy” 2012
  12. 12. AGRICULTURE IS A HUGE UNDER-UTILIZED RESOURCE The agricultural powerhouses have enough biomass for a good realistic scenario on car fleet mixMilliondry tons 250 200 Five major 150 crops represent 88% of the 24 crops analysed, totalli 100 ng 800m tonnes in 2030 available for 50 advanced biofuels 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 Maize residue Rice residue Other residues Wheat residue Sugarcane residue Soybean residue Source: Bloomberg New Energy Finance, “Moving towards a next-generation ethanol economy” 2012
  13. 13. THE RESIDUE POTENTIAL IS HUGE 2030 figures agricultural residues only 2.5% POWER 5% HUSBANDRY 17.5% 914 million tonnes of residues will be available 75% RESIDUES LEFT in eight selected regions and can replace ON FIELD half of the gasoline needs
  14. 14. PRODUCTION POTENTIAL BY 2030 LOWERING FOSSIL FUEL IMPORT BILL 10% of gasoline could be replaced by advanced biofuels by using only 5% of Argentina 1 7 the available agricultural residue supply 50% of the forecast 2030 gasoline Australia 3 7 demand could be replaced by advanced biofuels using only 20% of agricultural India 4 37 residue Mexico 8 8 Brazil 8 71 EU-27 9 60 China 24 89 United States 53 72 Bn. liters 10% blending scenario Residue Potential ScenarioNote: India and Argentina meet 100% of their gasoline requirements without using all their availableresidues. Mexico uses all its residues before reaching 10%. Source: Bloomberg New Energy Finance, “Moving towards a next-generation ethanol economy” 2012
  15. 15. • Biofuels is the only large-scale alternativewhen it comes to transportation• INVESTMENT IN The technology is ready BIOENERGY WILL BRING• Biofuels is competitive to oil ECONOMIC GROWTH• AND DEVELOPMENT FOR … and holds great potential in countriesresting on an agricultural base RURAL AREAS
  16. 16. APPENDIX IWFES
  17. 17. WHAT ARE THESUSTAINABILITY ASSUMPTIONS? LAND USE In this study we assume land use patterns will not change before 2030; PATTERNS existing activities are not altered nor is new agricultural land added We assume a maximum of 17.5% is potentially available for bioenergy HUMUS production; it is a conservative estimate which deliberately steers clear BALANCE of removing a high level of nutrients. For sugarcane bagasse we assume that 30% is used for advanced biofuels. The rest for bioelectricity YIELD Our methodology assumes stable yield growth rates, based on historic data between 1989 and 2010 GROWTH ENERGY We excluded energy crops and forestry residues. Taking them into CROPS account would however increase total biomass availability Source: Bloomberg New Energy Finance, “Moving towards a next-generation ethanol economy” 2012
  18. 18. WHAT ARE THEECONOMIC ASSUMPTIONS PLANT We assume total facility costs for a next-generation ethanol COSTS refinery will be approximately $1.50 per litre of annual capacityETHANOL For this example we used $0.44 per litre as it is roughly theREVENUES energy equivalent price with an oil price of $100 per barrel Following the EU Renewable Energy Directive indications, theGHG study assumes next-generation ethanol, using the enzymaticEMISSIONS hydrolysis technology, reduces emissions by 80% Source: Bloomberg New Energy Finance, “Moving towards a next-generation ethanol economy” 2012
  19. 19. AGRICULTURAL RESIDUE AVAILABILITY CHINA IN THE LEAD, 2030 The agricultural powerhouses still Argentina 2 39 hold great potential. If next- generation technologies fulfil Australia 8 16 their promise then these resources can be viewed in the India 9 110 same terms as a barrel of oil Mexico 20 20 Brazil 21 177 EU-27 22 151 China 60 221United States 133 180 Million dry tons Fuel Demand Residue Potential Source: Bloomberg New Energy Finance, “Moving towards a next-generation ethanol economy” 2012
  20. 20. REQUIRED INVESTMENTS WOULD BOOST ECONOMY IN RURAL AREAS, 2030 Argentina 10 65 Total potential to generate revenues of $1 trillion between Australia 9 58 today and 2050 (Fuel Demand Scenario) when assuming oil is India 50 329 at $100 per barrel Mexico 11 70 Brazil 94 622 EU-27 80 532 China 118 779 United States 96 633 Bn. USD Investment RevenueNote 1: Revenues are for delivered next-generation ethanol and are generated by plants throughout a 20-year lifetime.Note 2: We assume total facility costs for a next-generation ethanol refinery will be approximately USD 1.50 per litre of annual capacity. Source: Bloomberg New Energy Finance, “Moving towards a next-generation ethanol economy” 2012
  21. 21. JOB CREATION BY REGION MILLION MAN YEARS OF EMPLOYMENT, 2030 Argentina 0.30 Harvesting a sustainable amount of agricultural residue will provide Australia 0.12 rural economies with an additional revenue source that India 0.08 0.91 will help diversify farmers’ income Mexico 0.15 Brazil 0.15 1.25 EU-27 0.17 1.18 China 0.78 2.87 United States 1.02 1.37 Million man-years Fuel Demand Residue PotentialNote: Job creation, or one man-year of employment, in thebioproduct industry comes in two parts: firstly, biorefineryconstruction and operation jobs; and secondly, agricultural residuesupply chain jobs. Source: Bloomberg New Energy Finance, “Moving towards a next-generation ethanol economy” 2012
  22. 22. JOB CREATION ACROSS THEADVANCED BIOFUELS SUPPLY CHAIN COLLECTION TRANSPORT CONSTRUCTION CONVERSION ETHANOL # OF REFINERIES DEMANDFEEDSTOCK INVESTMENT NEEDS BIOMASS DEMAND MIX ($BN)CONVERSION AGRICULTURAL EFFICIENCY RESIDUE FEEDSTOCK TRANSPORT CONSTRUCTION OPERATION JOBS JOBS JOBS JOBS Source: Bloomberg New Energy Finance, “Moving towards a next-generation ethanol economy” 2012
  23. 23. 25% OFF TRANSPORT EMISSIONS WITH ADVANCED BIOFUELS Million ton CO2 equivalent 2500 2000 Gasoline emissions Fuel Demand Scenario 1500 Residue Potential Scenario 1000 Residue Potential 500 Scenario: 475 million tons of CO2 less between 0 today and 2030. Equates 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 to not burning 2.6 million railcars of coalNote: EU sustainable transport group data demonstrates a litre of gasoline has a well-to- wheel emissions footprint of 2.42kg per CO2e. Following the RED methodology, the study assumes next-generation ethanol – using enzymatic hydrolysis – reduces GHG emissions by 80%. Source: Bloomberg New Energy Finance, “Moving towards a next-generation ethanol economy” 2012
  24. 24. WHAT’S IN IT FORTHE WORLD Agricultural Energy Security Growth Jobs CO2 Residues 221 mio dry ton China could displace up to 37% of 779 bn USD 2.87 million man 29% China its gasoline consumption in 2030 years 180 mio dry ton The US could displace up to 16% 663bn USD 1.37 million man 11% US of its gasoline consumption in years 2030 177 mio dry ton Brazil could displace 83% of 622 bn USD 1.25 million man 67% gasoline consumption in 2030. years Brazil This is on top of sugarcane ethanol 110 mio dry ton India could displace up to 100% 329 bn USD 0.91 million man 80% of its gasoline consumption in years India 2030 and still produce 4bn litres for export 151 mio dry ton The EU27 could displace 532 bn USD 1.18 million man 54% Europe 68% of its gasoline consumption years in 2030 39 mio dry ton Argentina could replace up to 65 bn USD 0.30 million man 80% 100% of its gasoline consumption yearsArgentina by 2030 and potentially export ethanol 16 mio dry ton Australia could replace up to 19% 58 bn USD 0.12 million man 17%Australia of its gasoline consumption by years 2030 20 mio dry ton Mexico could displace up to 7% of 70 bn USD 0.15 million man 5% Mexico its gasoline consumption in 2030, years Source: Bloomberg New Energy Finance, “Moving towards a next-generation ethanol economy” 2012
  25. 25. WHAT’S IN IT FORBRAZIL? Energy The Brazil can replace 83% of its annual gasoline security consumption by 2030 with advanced biofuels Create almost 1.25 million jobs between 2010 Jobs and 2030 mainly in rural areas Brazilian players would be the major Economy beneficiaries, including 94 billion USD domestic engineering, construction and feedstock market Environ- Save CO2 and reducing GHG emission from ment gasoline related road transport by 67% Source: Bloomberg New Energy Finance, “Moving towards a next-generation ethanol economy” 2012
  26. 26. WHAT’S IN IT FORARGENTINA? Argentina can replace 100% of its annual gasoline Energy consumption by 2030 with advanced biofuels and security potentially export ethanol Create almost 0.30 million jobs between 2010 Jobs and 2030 mainly in rural areas Argentine players would be the major Economy beneficiaries, including 10 billion USD domestic engineering, construction and feedstock market Environ- Save CO2 and reducing GHG emission from ment gasoline related road transport by 80% Source: Bloomberg New Energy Finance, “Moving towards a next-generation ethanol economy” 2012
  27. 27. WHAT’S IN IT FORMEXICO? Mexico can replace 7% of its annual gasoline Energy consumption by 2030 with advanced biofuels and security potentially export ethanol Create almost 0.15 million jobs between 2010 Jobs and 2030 mainly in rural areas Mexican players would be the major Economy beneficiaries, including 11 billion USD domestic engineering, construction and feedstock market Environ- Save CO2 and reducing GHG emission from ment gasoline related road transport by 5% Source: Bloomberg New Energy Finance, “Moving towards a next-generation ethanol economy” 2012
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