Agenda

The Future of Industrial Biorefineries Biorefineries in North America: Challenges and Opportunities

Driving forces World population growth, (GHG) emissions, sustainable energy, chemicals and materials, energy security, climate change. BiorefineriesNew technologies will allow us to bridge the gap between economic growth and environmental sustainability in the long run. Biorefinery involve many stakeholders from various sectors and thus need collaboration-based solutions Biorefineries need multi-disciplinary technology (e.g. for fermentation, gasification and chemical conversion, and also for pre-treatment and storage) to ensure that bio-based products break even. This will require the concerted action of various stakeholders such as grain processors, chemical companies, and technology players to cover all aspects of the complex biomass value chain, from feedstock production to end-user industries. To overcome the challenges, various stakeholders need to play an active role in promoting the industrialization process of biorefinery systems including Governments (e.g. policy, R&D investment, technology infrastructure, regulation, balancing foodenergy security) Companies highly exposed to fossil feedstock (Alternative / replacement) R&D and new technology start-up (provide innovative conversion technologies) Retail and business consumers (Eco value / perceived benefit from environmental sustainability) NGOs and public authorities (to ensure development of the industry in a manner compatible with the highest environmental and social standards and ensure environmental sustainability) CollaborationDevelopment of biomass supply chain

Summary: Collaboration-based solution is a key.

Biorefinery Concepts (1/2)

Sugar Starch Vegetable oil

Depending on the feedstock and the desired output, biorefineries employ a variety of conversion technologies (e.g. fermentation, gasification and transesterification)
3

Biorefinery Concepts (2/2)

Lignocellulosic

Depending on the feedstock and the desired output, biorefineries employ a variety of conversion technologies (e.g. fermentation, gasification, and transesterification)
4

Revenue Potential. There are significant revenue potentials along the entire biomass value chain. The values given (circle) are approximate business potential in US$ billions by 2020.

Biomass value chain

Strategic Relevance for Selected Industries Impact of biorefinery on relevant industries

Agriculture Increase the overall market size for agricultural products Economics of food/feed production vs other land uses Impact on food prices Technology to increase agricultural productivity New plants and novel traits Increase in fertilizer use Automotive Flex-fuel vehicles Biofuels to reduce the tailpipe GHG emissions to meet upcoming regulations Aviation Alternative fuels for aviation have to have a high energy density, a low freezing point. Alternative aviation fuels should be drop-in fuels, miscible with petroleum-derived kerosene at any percentage. (e.g. FT liquid, hydrotreated vegetable oil) By 2050, second-generation biofuels, in the form of BTL are expected to contribute 30% of the aviation fuel mix Transportation The transportation industry is looking at biofuels as a means to reduce the carbon footprint Transportation constitutes almost 60% of global oil demand with 1.6% annual growth rate to 2030.

Chemical Substitution with green alternative of the same functionality and performance. Rather than building entire biorefineries, mostly chosen to replace selected chemical intermediates in their current product portfolios driven by economics and sustainability concerns 6

Energy The fundamentals of power generation from biomass are economically quite attractive when compared to other renewable power options, and will require lower subsidies in contrast to wind and solar power.

Key Challenges of Commercialization: Technical Challenge Feedstock Yield and Composition of Biomass.
Feedstock yield and composition of biomass which can do best for optimal conversion efficiency. (low lignin plant by GM technology) Security of feedstock (technology to improve weather tolerance of plant)

Efficient Enzymes Enzymes for conversion of lignocellulosic material to fermentable sugar. New technology for biomass valorization (Lignin as a value added chemical instead of burning for power gen.)
Microbial Cell Factories Production of host cell used and Biofuel-Producing Organisms Novel catalysis technologies are also needed to transform the chemical intermediates into commercial products. (e.g. Lactic acid to PLA) New recovery methods to recover product from the fermentation broth. Processing and Logistics. Transportation of low-density biomass at lower cost by using densification techniques (increased density). Preservation techniques to control physical and chemical modification of biomass during pre-conversion processing. Bio-based product distribution network is another necessity,

Key Challenges of Commercialization: Commercial and Strategic Challenges Integration into Existing Value Chains

Drop-in chemicalReplace molecules in existing value chains easily with biochemical (e.g. bio-ethylene/petro-ethylene) Bio-based products that cannot easily be integrated into existing value chains (e.g. bioethanol as a fuel) Novel products based on new intermediates, e.g. bio-based polymers, usually have different properties to existing polymers (e.g. PLA) Funding Difficulties Funding is becoming increasingly tight. Large amounts of capital are needed to commercialize the biorefinery technology. High uncertainty with respect to the profitability of a biorefinery Uncertainty Facing a New, Unconventional Field. the inability to get a price premium for bio-based products when compared to conventional petroleum-based products Insufficient, uncertain public incentives

Key Challenges of Commercialization: Sustainability Land-Use Change and Its Effect on GHG Emissions Challenge GHG emissions critically caused by land-use change.

Direct land-use change (DLUC) occurs if feedstock for biorefinery purposes (e.g. soybean for biodiesel) displaces a prior land-use (e.g. forest), thereby generating possible changes in the carbon stock of that land. Indirect land-use change (ILUC) occurs if pressure on agriculture due to the displacement of a previous activity from the production of biomass feedstock induces land-use changes in other locations. Land-use change can have either a positive or negative effect on the GHG balance of biorefinery outputs. Thus, there is a need for a comprehensive agronomic model of food and fuel production. Link between Commodity Prices and Biorefineries Impact of bio-production on in food supply and price. (e.g. 1st Gen. ethanol) Development of second-generation biofuels that may put less pressure on the link between food prices and fuel. Reputational Risks Biorefineries are run are currently NOT broadly accepted in their entirety by the general public. Concerns are multiple (e.g. biodiversity, damage rural communities through large multinational corporations, adversely affect labour conditions, make excessive use of water resources or damage the food supply) Legislation-driven Deforestation There are significant uncertainties in emissions arising from deforestation due to demand for biofuels is closely linked to the land-use change. High targets for bio-based product manufacturefavouring biorefineries and bio-based economy were set by policy malerbut they do not account for sustainability issues (e.g. incentives exist to cut down forests for land used for biofuel plantation)

 The Role of Government Governments have a key role to play in providing seed support particularly at the precompetitive stage. The principle of command and control could apply to biorefineries. By setting stringent regulations in a sustainable manner, the bio-industry will respond in a similar way, driving technological advances and overcoming commercial challenges. Creating MarketsBoth mandates and subsidies introduced by governments will ultimately create the markets to support biorefineries and encourage global competition. Energy SecurityEncouraging local energy security will also benefit the environment and boost rural communities. Inform the public that bio-based products are a realistic supplement to fossil-based products but that they cannot mitigate the rising demand for fossil fuels Climate Changethe use of bio-based sources of energy and feedstock should be encouraged by governmental regulation. (e.g. lower CO2 emissions target) The Role of Policy and Regulation Collaboration Set up public-private partnerships toproducts. initiate private sector investments Mandates set by governments will support the production of bio-based and reduce the delay between product development and commercialization.

Recommendations: The Role of Government

Subsidies and incentives should be given to entrepreneurs or businesses considering low-carbon petroleum replacement strategies to encourage investment in new technology and infrastructure and reduce the reliance on public funding. (e.g. biobased plastic could be subject to tax reductions) Trade barriers to biomass feedstock or products are a substantial obstacle to the establishment of a working 10marketplace for biomass.

Recommendations: The Role of Business and Investment and R&D

The Role of Business and Investment Investments in biorefinery infrastructure must be supported at an early stage to ensure biofuels production can keep up with the growing demand for sustainable fuels. Investment is essential to: Support the development of global biomass supply chain Develop and support a reliable upstream supply chain able to mobilize a sufficient level of feedstock available for conversion, but not at the expense of food/land use Grow larger quantities of energy crops than is currently under cultivation Organize feedstock storage facilities to ensure a continuous supply of feedstock throughout the conversion process Ensure growth of a global industry through transportation and trading infrastructure

The role of Research and Development Research into conversion techniques and feedstock processing should be encouraged to achieve the diversification of feedstock supply and greater conversion efficiency. Research into agriculture and crops should be supported to gain a better understanding of crop rotation, land management, land-use change issues, the food vs fuel trade-off, cultivation and harvesting techniques, and natural resources. Research into the optimization of biorefineries should be supported to create a biorefinery analogous with todays oil refinery.

11

Agenda
The Future of Industrial Biorefineries Biorefineries in North America: Challenges and Opportunities

12

Biorefineries in North America: Challenges and Opportunities Fully flexible and fully integrated facilities are the endgame
for the biomass producers. Challenges and opportunities inherent to the implementation of Fully Technology Regulation/Policy integrated Biorefineries
R&D seems underfunded in areas of chemistry and process technology, especially in advanced biomass sources. The open challenge is feedstock flexible technology platform. Technical maturity falls short of delivering its full value to the economy. Still need technology to make product/ process performance and cost competitive. There is lots more value waiting to be extracted from optimization, e.g. separation; optimize the use of resources andminimize wastes. Acadamia-industry collaboration can yield significant impact in the early development of technical skills needed in biorefineries. Systems-based approachintegrating multiple disciplines together into a technology for biorefinery solution. 13 Scarce skilled talent, especially in areas that Policy/regulation is possibly the most critical enabler in the US. Uncertainty of regulations is a big issue. Industry needs regulatory certainty. A stable, working IP protection could accelerate biorefineries. Economic /social Uncertainty of profitability is a larger issue than scarcity of capital. Potential volume needed and complexities in supply chain and regulation make the future of biorefinery extremely uncertain. Consumer adoptionSustainability is still not a significant differentiator in the eyes of consumers unless they can directly experience the benefits. Geographiesfast technical development with low-cost production in other geographies. Good resource managementfood and fuelneed to be highlighted to avoid negative social perception.

Biorefineries in North America: Strategic Model

Rational Different technologies for biorefineries are currently at different stages of maturity Collaborative action is more likely focused on debottlenecking the development process by focusing on a few areas of common benefit. This is an ideal scenario to build on and develop a cross-industry, value networks approach. Areas where collaborative approaches can move the industry forward Developing systems thinking for the entire industry Working towards regulatory certainty Adopting an iterative development in which the technical experience, consumer awareness and market maturity gained with leading products such as ethanol can be rapidly included in the development of other products and technologies.

Collaboration Model should consider: Consensus on which products and technologies have a higher likelihood of success to be fed as recommendations to government policy maker. Strategic balancing among three type of innovation (a) disruptive technologies to existing markets, (b) new market creation through technology development (or deployment) and (c) incremental innovations Building long-term relationships Building on a solid understanding of the technical base Building from engineering/commercialization projects and not from science projects

14