0. Biorefinery feasibility study
Amsterdam, 20 October 2011

1. Background of feasibility study
Feasibility study on establishment of integrated, demonstration scale, bio-refineries in Europe, focusing high value add products and second generation feedstock
Focus on vision, value chains and required capital investments, funding options, governance and implementation paths
What
Europa Bio Team
Dalberg (external consultant)
Bio-based industry:
Who

2. 2nd generation biorefineries align with EU priorities
Strong alignment with EU core priorities….
… but interventions need to be targeted, and aligned with other initiatives
The EU has defined three ambitions for 2020, which are linked to the biobased economy and 2nd generation biorefineries:
Smart growth: developing an economy based on knowledge and innovation
Sustainable growth: promoting a more efficient, greener and more competitive economy
Inclusive growth: fostering a high-employment economy delivering social and territorial cohesion
There is much research on 2nd generation biorefineries, but the “valley of death” between early stage research and commercialization, especially outside bio-fuels (Chemicals, materials and fibres) remains
Europe is well positioned to spearhead the development of a new bio-economy but risks falling behind the global competition
European decision makers expressed interest in seeing more demonstration scale activity and asked for a fact base on options and funding needs
The industry is willing to invest but lacks public funding support to realize demonstration projects 2 2

3. Overcoming the gap from research to funding (called the “valley of death”) requires co-investments from public and private stakeholders
Governments and Industry
Markets
Financing, technology,
ideas
Research
and
Development
Number of projects
Demonstration
Deployment
Diffusion
Graphics: Mercer

4. Brazil, China and the US are making significant public investments in bringing biorefineries to commercial scale EU
High targets for the replacement of fossil transportation fuels
Focus: biodiesel/ biochemicals
Public support last 5 years1: ~€ 200 million US
High targets for the replacement of fossil transportation fuels
Wide range of support schemes including grants, tax credits, loan guarantees, etc
Focus: bioethanol
Public support last 5 years: ~ € 1.2 billion
BRAZIL
World leading first generation biofuel production
Some commercial 2G bagasse refineries in operation
Aggressive government growth targets for bioethanol by 2025
CHINA
Large-scale investment in biorefineries
Plan to substitute 20% of crude oil imports by 2020
Target of 1.7bgy ethanol by 2010
Estimated funds provided by FP6 and FP7 to biorefinery-related projects
Source: US Department of Energy, EU, World Economic Forum, Bio-economy.net

5. For example the US has multiple support mechanisms for the biorefinery industry focusing on demonstration and commercial application
Low
High
US approach to bio-refineries
Government institution
Estimated
Program (start year)
Description
Impact*
Potential
Mainly for solving national security issue of foreign oil dependency
Focused on bio-fuels and bio-ethanol in particular
Started under Bush administration and continued under current
Support programs boosted with the Economic Recovery Act or 2010 granting USD 564 million to bio-refinery projects
Renewable Fuel Standard
Goal to produce 36 billion gallons of bio-fuels by 2022
US gov
Bio-preferred procurement (2002)
Act to favour bio-based products over alternatives in public procurement
Dep. Agriculture
Demand
Bio-preferred labelling (2002)
Cataloguing and labelling products based on biorefinery ingredients
Dep. Agriculture
Biomass Crop Assistance Program (2008)
Lucrative support for farmers to transition to energy crops
Dep. Agriculture
Biomass Program
USD million per year support to 2nd generation biorefineries (mainly demo)
Dep. Energy
Clean Energy Loan guarantee (2007)
Loan guarantee to finance commercial scale bio-refineries
Dep. Energy
Supply
Bio-fuels Loan guarantee
Loan guarantee to finance 2nd generation bio-refuel plants
Dep. Agriculture
Corn Ethanol tax Credit
Applies to all bio-fuels
0.45 $/gallon
IRS
Cellulosic Ethanol tax Credit
1.01 $/gallon production tax credit terminates 2012
IRS
* Impact to date – some programs have only been starting slowly and are therefore not showing too much impact yet
Source: interview with BIO; Dalberg analysis

6. Current landscape of biorefinery initiatives in the EU
Funding mechanisms
Fuel
Current landscape of biorefinery initiatives in the EU
Chemicals
Mixed outputs
NER300
EuroBioRef
European
Union
NOT EXHAUSTIVE
FP6 - FP7
BioSynergy
EuroBioRef
BioCoup
BioCore
EIBI
SupraBio
SupraBio
Research projects
Belgium (>20)
Finland (>50)
France (>20)
Germany (>10)
Sweden (>10)
Leibniz Inst fur Agrartechnik
Icelandic biorefinery
Icelandic biomass
Biorefinery Ireland
BioMCN
Nuon
Europe BioHub Rotterdam
Member States
National funding (e.g. FNR - Germany, Nordic Energy Research, BOF - Belgium, BBSRC -UK, etc.)
Inbicon Biogasol Brensbach
NSE Biofuels Abengoa
BioAmber Solvay Roquette/DSM
Bio T-Fuel FMS Innventia
ARD Biodemo
GoBioGas BPS TMO
Inbicon
DTU/BioGas
Procethol 2G
Sekab
Company
Research
Pilot
Demonstration
EU is still far from a biobased economy despite the number of initiates and funding mechanisms:
Most facilities focus on biofuels and first generation feedstock
Most funding is for research activities, rather than demonstration facilities
Source: Star Colibri, Dalberg research

7. EU Support should address multiple challenges
Push mechanisms
Public support to overcome “valley of death”, and to co-invest together with the private sector
Agricultural policy
Policies to promote production of RRM for all industrial uses (material and bioenergy) to secure sustainable renewable feedstock.
Support for resource efficiency (land use, climate action) of RRMs, including support for “cascade utilisation”
Need for financial incentives to improve logistical capacity to collect biomass residues in EU Ag and forestry policies
Pull mechanisms
Need for innovative incentives (e.g. tax or state aid measures) to support the development of new sustainable bio-based product production processes
Binding political framework for supporting biobased economy in the long-term

8. Study findings : Capital requirements, Technical design and Funding model
There are different technological and commercial options for technologies and feedstock to create the 2nd generation bio-based economy
Biological enzymatic conversion of into C5 and C6 sugars and ultimately chemicals, materials and energy.
Thermochemical conversion of wood and black liquor into chemicals, materials, fibres and energy.
Thermic conversion of agricultural residue, hard wood and energy crops into syngas and subsequent biotechnological transformation to chemicals and energy carriers
There are different objectives for 2nd generation bio-refineries
Different foci along the value-chains (e.g. input, conversion technologies, output)
Different beliefs in optimal technological pathways
There are two main models for public-private collaboration, with distinct costs and benefits
A joint, consensus-focused design in which a wide range of private and public actors work together to develop 2-3 designs
Competing coalitions (sub-consortia) of private sector companies vying for public sector funding (match-fund)
1. For a new biological enzymatic biorefinery the size of 10 tons of dry biomass per day the capital investment required will be in the range of € million. For a new thermochemical facility at 100 tons per day the capital investment is likely to be € million. If feasible to build on existing facilities investments required will drop substantially

9. Summary of principles for ideal location for a biorefinery
The locations of the bio-refinery is a complex decision-making process, incorporating feedstock availability, capital costs, clusters, co-location synergies, member state involvement and logistic capabilities
The importance of the location variables depends on the scale of the plant and the time horizon considered. It should optimize the plant’s economics and operations in order to provide the best simulation for larger-scale plants
Early stage facilities are very sensitive to Capex. Commercial scale plants, however, are much more sensitive to operating costs
External financial support and co-location synergies have a high impact on funding needed and are key for demonstration scale facilities
Feedstock costs are especially important for commercial scale facilities
In the medium to long-term, different EU regions might improve their cluster landscape, funding schemes, feedstock availability or transportation network. This would increase the number of potential good hosting regions for the biorefinery
In the short-term, some EU countries (e.g. France, Germany, Belgium, the Netherlands, Denmark, UK, Sweden and Finland) are more attractive locations for a biorefinery (agriculture-based in the heart of Europe and UK, wood-based in Scandinavia)
In the long-term – and as full commercial scale biorefineries emerge - other regions could become attractive locations for a biorefinery provided improvement in key location variables (e.g. Eastern Europe)
Source: Interviews, Dalberg analysis

10. Steps to define location of demonstration biorefinery
Decision 2 (if decided to build a new facility)
Funding mechanism
Feedstock, technical route, output
What needs to be tested
Decision 1:
Build on existing facility
and/or
Build a new facility
Decision 3:
Selection of attractive clusters
(co-location synergies)
Decision 4:
Selection final candidates to host the biorefinery
Specific
biorefinery
location
Economic synergies
Operability, access to talent pool and expertise
Feasibility to join the cluster (regulation, capacity, etc.)
Existence of local feedstock market close to cluster
Degree of industrialization of agriculture/forest processing
Crops/forest residues yields
Access to transportation network
Open funding windows
Member states’ support
Consortia’s private interests, state the technology
Availability of time and financial resources
Project match with existing facilities
Decision
Criteria:
Decision outcome:
Decision to build a new plant and/or to join an existing facility
Selection of country or high-level region
Selection of most attractive clusters within the selected regions
Selection of key clusters offering the best co-location synergies, feedstock availability and transportation costs
Source: Dalberg analysis

11. Where does this lead
Establishing a dedicated platform for biorefineries through a possible ERANET + Scheme
Investigating funding for biorefineries through PPPs and Horizon 2020 (EC Framework programme for research and innovation )
Input into recently published Star-COLIBRI Vision document and Research Roadmap and ambitions for the future
Feasibility study findings integrated into the Commission’s consultation on the Common Strategic Framework for EU Research and Innovation Funding

12. Funding options Primary recommended options High Low
Best alternative options
Estimated match
Timing of grant
Program/facility
Options to use
CPI, BE-Basic, BioBase Europe, ARD, etc.
Work with/build on existing facility with potential support from FP7 call
Short term
( )
European Industrial Bioenergy Initiative (EIBI)
Establish consortia to answer EIBI call for demo facility
Tailored European Biorefinery Initiative (EBI)
Engage EC to include this initiative under the European Strategy for Bioeconomy
Establish demonstration scale ligno-cellulosic bio-refineries producing chemicals and materials
Medium term
( )
Structural funds
Invoke a member state to support a biorefinery project
FP8 call for biorefineries focused on non-fuels
Engage in FP8 dialogue to help define early FP8 call for demo biorefineries
Long term
(2015-)
PPP for demo bio-refineries focused on non-fuels
Help design new PPP instruments
Form coalition to apply in 2014
NER300
Establish consortia for next NER300 call
Article 185
Invoke national research support to form partnership
ERA Net Plus
Invoke national research institutions to establish joint call

13. Steering group and external experts
Yvon Le Henaff ARD
Jean-Marie Chauvet ARD
Chris Dowle CPI
Jerry Cooper CPI
Ana-Maria Bravo Danisco/Genencor
Marcel Wubbolts DSM
Ward Mosmuller DSM
Andreas Jung Evonik
Manfred Kircher Evonik
Matthias Moll Evonik
Lars Hansen Novozymes
Anders Kristoffersen Novozymes
Vincent de Jong Purac
Peter Baets Purac
Johan Elvnert Star Colibri
Irina Sterr SüdChemie
Ulrich Kettling SüdChemie
Clas Engstrom Processum SE
Other experts interviewed
Peter Axegard Innventia
Pascal Bailleul Chamtor
Greg Arrowsmith NER300
Birger Kerckow FNR, EIBI member
Bruno Schmitz DG RTD
Andreas Pilzecker DG Agriculture
Maria Fernandez DG Research and Innovation
Jean-Emmanuel Faure DG Research and Innovation
Brigitte Weiss Research and Innovation
Giulia del Brenna DG Enterprise and Industry
Andrew Hagar World Economic Forum
Thomas Pscorn Andritz
Corry van Driel BE-Basic
Project Team – EuropaBio
Dirk Carrez
Jasmiina Laurmaa
Antoine Peeters
Camille Burel