The document discusses the potential of biomass industries to provide renewable and sustainable alternatives to petroleum and timber-based products. It describes how biomass can be used to produce fuels, electricity, materials and chemicals. However, biomass industries currently struggle to compete due to artificial price supports for other industries and a failure to consider full environmental and social costs. For biomass industries to thrive, policies need to factor in total lifecycle costs and redirect subsidies currently given to non-renewable industries toward research, development and infrastructure for bioproducts.

1. BioMass Industries Prepared by Tim Castleman To Promote a Renewable Resource System Using Fibrous Crops such as Hemp and Kenaf Copyright 2002, Tim Castleman, Arizona Fuel and Fiber Company, LLC 1058 N. Higley Rd. Suite #108-160, Mesa, Arizona 85205 480-804-9555 Fax: 208-979-9846

2. Purpose of presentation To describe BioMass Industries Describe their products Describe profitable business models for BioMass Industry Discuss how to develop a BioMass industry

3. BioMass Defined Biomass is any plant or tree matter in large quantity. It is used in a variety of ways as a feedstock for numerous industrial processes now. These include food processing, papermaking, electricity generation, building materials and pharmaceuticals to name a few.

4. The Biobased Products and Bioenergy Vision Biomass resources — naturally abundant throughout our nation — will be a cornerstone of a new energy economy in the United States. An integrated biobased products and bioenergy industry will produce power, fuels, chemicals, and materials from crops, trees, and wastes, helping to grow the U.S. economy, strengthen U.S. energy security, protect the environment, reduce greenhouse gas emissions, and revitalize rural America. Visionary Goals By 2010, increase the use of biobased products and bioenergy in the U.S. by 3-fold over 2000 levels. By 2020, increase the use of biobased products and bioenergy in the U.S. by 10-fold over 2000 levels. With this significant increase, biomass would account for 25 percent of our nation’s total energy consumption (including feedstocks). The U.S. would create the foundation for a secure energy future and establish its worldwide leadership in biobased products and bioenergy technologies. By 2050, increase the use of biobased products and bioenergy in the U.S. by another 2-fold to 3-fold over 2020 levels. At this level, biomass would account for as much as 50 percent of our nation’s total energy consumption (including feedstocks). The U.S. would have the capacity to be fully energy-independent, and U.S. companies would be dominant players in substantial worldwide markets for systems and services related to biobased products and bioenergy. US DOE BIOBASED PRODUCTS AND BIOENERGY VISION – July, 2001

5. What are some BioMass Industries? BioMass Fuel Gasification/Pyrolysis Producer gas Methanol Ethanol Acid Hydrolysis Cellulosic Hydrolysis Diesel Oilseed crops Oil producing trees and crops Methane Anaerobic digestion Municipal Waste Treatment

6. What are some BioMass Industries? Electricity Use methane produced by anaerobic digester Right now, ONSI Corporation in Windsor, Conn., a subsidiary of International Fuel Cells, is the only commercial manufacturer of fuel cells . Seventy-four of its units, each the size of a minivan, are now in operation, often in locations such as hospitals and remote hotels where grid power is expensive and reliability is worth a premium. (An ONSI installation in Groton, Conn., is consuming methane from a landfill, thereby both generating power and siphoning off an explosive waste gas; the U.S. Department of Energy is supporting a similar project.) Each cell provides 200 kilowatts of power; the heat each produces can also be used to warm buildings, an approach known as cogeneration. ONSI's marketing manager, Gregory J. Sandelli, states that in 1.25 million hours of total use, his company's cells have remained in operation 95 percent of the time--a figure that bests on-site, diesel-powered generators. The units, which use phosphoric acid as an electrolyte, are designed to last 20 years.* Co-fire with coal to reduce stack gas emissions Direct combustion for heat & power * Source: www.webconx.com

7. More BioMass Industries Textiles Technical & Industrial fabrics Geo-textiles Cordage Composites Building materials Injection molded (Automotive parts) Polymers or binders, biodegradable plastic Absorbents Oil absorbent can then be combusted with coal to make power Bioremediation of contaminated soils Paper products High quality paper – high value pulp Newsprint and other high volume papers Add fiber to recycled paper to extend life

8. The Technology Exists But Why Few Viable Industries? Individually BioMass products cannot compete price wise with timber/petroleum based products. Artificial price is supported by government subsidies that have continued long past intended time period. Financial planning, analysis and forecasting fail to include social and environmental costs. Bankers reluctant to invest capital into infrastructure Cannot compete with government subsidized forestry and petroleum products

9. Full Life Cycle Analysis Historic planning, accounting, and analysis often fail to consider the environmental and social costs Cost to manufacture, market, distribute and use a product Cost to Dispose of product Effect of toxic materials in disposal facilities Initial cost to environment Use of natural resources Defense Budget

10. Effect of Full Life Cycle Analysis A new [1993] report from the respected Environment and Forecasting Institute in Heidelberg, Germany puts the car right back at the centre of the transport debate and raises fundamental questions about a society increasingly adapting itself to the car. The German analysts take a medium-sized car and assume that it is driven for 13,000 km a year for 10 years. They then compute its financial, environmental and health impacts "from cradle to grave". Long before the car has got to the showroom, they find it has produced significant amounts of damage to air, water and land ecosystems. Each car produced in Germany (where environmental standards are among the world's highest), produces 25,000 kg of waste and 422 million cubic metres of polluted air in the extraction of raw materials alone, say the Heidelberg researchers.

11. Each car is moreover responsible for 1,016 million cubic metres of polluted air and a number of abrasion products from tyres, brakes and road surfaces; 17,500 grams of road surface abrasion products; 750 grams of tyre abrasion products; 150 grams of brake abrasion products. Each car also pollutes soils and groundwater and this calculated for oil, cadmium, chrome, lead, copper and zinc. The environmental impact continues beyond the end of the car's useful life. Disposal of the vehicle produces a further 102 million cubic metres of polluted air and quantities of PCBs and hydrocarbons. The sum of these different life cycle stages produces some insights into the penalties societies must face if they become car dependent. In total, each car produces 59.7 tonnes of carbon dioxide and 2,040 million cubic metres of polluted air. Each car, say the Germans, produces 26.5 tonnes of rubbish to add to the enormous problems of disposal and landfill management faced by most local authorities.

12. While this detail is impressive (and wholly absent from the environmental claims of motor vehicle manufacturers and motoring organisations), it is still not complete. Some of the more startling revelations are in the researchers' wider analysis of social and environmental costs. Germany suffers from extensive forest damage attributed to acid rain and vehicle exhaust emissions. The Heidelberg researchers calculate that each car in its lifetime is responsible for three dead trees and 30 "sick" trees. [...] The Heidelberg researchers say that over its lifetime, each car is responsible for 820 hours of life lost through a road traffic accident fatality and 2,800 hours of life damaged by a road traffic accident. Statistically, they suggest, one individual in every 100 will be killed in a road traffic accident and two out of every three injured. Translated into vehicle numbers, this means: Every 450 cars are responsible for one fatality; Every 100 cars are responsible for one handicapped person; Every 7 cars are responsible for one injured person;

13. And into production data: - Every 50 minutes a new car is produced that will kill someone; - Every 50 seconds a new car is produced that will injure someone. Land use data are also brought into the equation to show that Germany's cars, if one includes driving and parking requirements, commandeer 3,700 sq km of land~60% more than is allocated to housing. Every German car is responsible for 200 sq metres of tarmac and concrete. The total impact of the car over all the stages of its life cycle also produces a quantifiable financial cost. The Heidelberg researchers estimate this to be 6,000 DM per annum per car (about $5,000) and covers the external costs of all forms of pollution, accidents and noise after income taxation are taken into account. This is a state subsidy equivalent to giving each car user a free pass for the whole year for all public transport, a new bike every five years and 15,000 km of first class rail travel.

14. The car is thus revealed as an environmental, fiscal and social disaster that would not pass any value-for-money test. More importantly, the car can now be seen as a disaster in itself. It is ownership as well as use that is the problem of the car and a car used sensitively (if that is possible) is still a problem for energy, pollution, space and waste. The balance sheet's bottom line is enormous societal deficits and penalties and an assumption that we will all continue to pay the bill. Reference: Oeko-bilanz eines autolebens. Umwelt-und Prognose- Institut Heidelberg. Landstrasse 118a, D69121, Heidelberg, Germany. *John Whitelegg is head of the Geography Department at Lancaster University and director of the Environmental Research Unit, Lancaster University. (Oct 93) John Whitelegg, Eco-Logica Ltd., Transport and Environment Consultancy, 713 Cameron House, White Cross, Lancaster, LA1 4XQ (0524) 842655, Fax: 0524-842678

15. How to realize the benefits Direct Social Investment Research & Development Immediate redirection of petroleum and timber subsidies to bio-products Open government records to public scrutiny Modification of patent laws Market planning & development Localized support by university and public/private institutions Support localized value adding business assistance Creation of producer co-op’s to achieve economies of scale Encourage local value adding business units Open membership in regional co-op’s Centralized raw material processing Co-op members use raw material produced by the main processing facility Increased taxes on harmful, non-environmentally friendly products Government restrictions on use of harmful, non-environmentally friendly products

16. An additional way to make BioMass Industries Profitable Become more efficient in the use of BioMass to produce additional products from the same source. Characteristics of Kenaf What are its products Current Issues in the Kenaf industry

18. Why grow Kenaf ( Hibiscus cannabinus )? It can be a replacement for many forest products, including wood for paper pulp, building materials, cooking fuel and will relieve the pressure to cut our old growth and ancient forests here and around the world. Does kenaf require heavy use of pesticides? No, pesticides are used to protect the growing plant from insects or disease; however, a pre-merge herbicide is used to establish a stand. How much water does kenaf require to produce a crop? Kenaf requires less water than traditional crops, cotton, and uses the same farm equipment to plant and cultivate the crop. Kenaf will use about 3 acre feet and >100 lbs of nitrogen. What kind of equipment does it take to process kenaf? Many of the products have been prototyped along with equipment to produce the products. Mississippi State University has led the way in this field. University of Arizona and US Department of Agriculture have been heavily involved but have been unable to become directly involved in commercialization because of regulatory constraints FREQUENTLY ASKED QUESTIONS ABOUT KENAF:

19. What are some other uses of kenaf? It can be used as a high quality animal feed, as geotextiles, clothing, building material, automotive plastics fill for enhanced strength and durability, absorbents used in oil spill and hazardous materials cleanup and as a high performance animal bedding. Only your imagination is the limit. Why grow kenaf in Arizona? It thrives in our desert heat and can produce a consistent yield under our growing conditions making it a suitable candidate as an industrial crop. It can use moderately saline water including sewage effluent and is an easy crop to produce. How much does kenaf grow in a year? It will produce 10-14 tons dry matter per acre and grow 12-14 feet in a single season. It will produce 20X the amount of oxygen as a comparable stand of yellow pine and 5 times the fiber in a 150 day growing season. Why hasn’t kenaf succeeded as crop and product? Lack of funding and insufficient local supply to support an industry have combined to keep kenaf from becoming a success. Our network of experts can fulfill any need for statistics, test data, lab analysis, history and more.

20. Kenaf products Short fiber products Absorbents Cat / Poultry Litter Horse Bedding Industrial absorbent Feminine Products Diapers Paper Products Whole stalk can be efficiently made into paper Use as filler with other cellulose

21. Kenaf products Long fiber products -- High Strength) High Quality Paper Pulp Bible paper Cigarette paper Archive grade paper Filtration paper Automotive Panels & Components Substitute for Carbon, Glass and other mineral fibers Offers weight, strength and environmental advantages Cordage, Rope and Twine Textiles Industrial fabrics & lay-up composite materials Geo-Textiles Commercial fabric Fibrous Reinforcement of Plaster, cement and other binders Structural support building materials Lightweight, insulated building blocks using local binder Blend in slurry with gypsum for a wall board product

22. Current Issues Accurate accounting method Mechanical vs. chemical separation Genetic modification of plants and enzymes Adequate R&D time & funding Difficult political environment

23. R&D Goals To identify those opportunities with the greatest likelihood of success requires in depth, localized analysis and planning: Growing Kenaf Technology Issues Capital Requirements Market Requirements Investor Requirements Employee Requirements

24. R&D Goals Processing Kenaf Mechanical separation vs. chemical separation Technology Issues Capital Requirements Market Requirements Investor Requirements Employee Requirements Producing Kenaf based products Retrofitting existing plants New plants

25. Kenaf Production costs Kenaf Production Bast Core 50 Gallons per ton Total Production -- tons 302,400 99,792 199,584 9,979,200 Yield per acre -- tons 10 Total Acres required 30,240 Cost per acre to grow $ 500 Total Cost To Grow $ 15,120,000 Kenaf processing costs per ton $ 56 Total Processing Costs $ 16,934,400 Total Kenaf Costs $ 32,054,400

26. Fiber/Ethanol Plant Capital Costs Buildings & Land $1,980,000 Fiber separation and receiving $4,100,000 Material handling & Storage $2,125,000 Total, Land Buildings and Equipment $8,205,000 3 months operating expenses $ 2,317,200 Ethanol plant $18,000,000 General Administrative $300,000 Office Equipment $50,000 Rolling Stock $100,000 Total Capital Costs $37,177,200

27. Unit Costs Production capacities Per Mo. Per Year Production Fiber -- tons 8,316 99,792 Ethanol gallons 831,600 9,979,200 Unit Costs Fiber $/ton $ 275 $ 2,286,900 $27,442,800 Ethanol $/gallon $ 1.37 $ 1,139,292 $13,671,504

28. Annual Return Annual ROI Unit Pricing Fiber -- per ton $ 400 $ 3,326,400 $39,916,800 Ethanol - per gallon $ 1.00 $ 831,600 $9,979,200 Unit Profit/Loss Fiber -- per ton $ 125 $ 1,039,500 $ 12,474,000 Ethanol - per gallon $ (0.37) $ (307,692) $ (3,692,304) Net Plant Profit/Loss $ 731,808 $ 8,781,696 Cash on Cash Annual Return 24%

29. Value of bast fiber 20% to 33% of biomass is high quality bast fiber which ranges in value according to end use. May be compared to cotton at $0.50 lb/ $1,000 Ton In Composite applications it may be compared to carbon and glass at $3 to $5 lb., but with improved qualities. As feedstock for a specialty pulp mill, $400 ton (US)

30. Key Success Factors for a Kenaf industry Market for Kenaf products Sufficient investment capital Technical and management expertise Political Will Business climate acceptance Intellectual property resource access Human resources

31. Proposal for starting a Kenaf industry Obtain capital from interested parties to prepare Business Plan & Action Plan Prepare Business Plan & Action Plan Engage professional assistance Get commitments on key strategic relationships Purchase commitments Market evaluation Investor commitments Land resources Capital requirements Human resources Technology commitments Seed & variety development support Processing & handling equipment & systems Conversion methods