The potential of lignocellulosic ethanol in EU by 2020

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The potential of lignocellulosic ethanol in EU by 2020 Calliope Panoutsou 1, Berien Elbersen 2, Joost van Stralen 3, Aylu Uslu 3, Hannes Böttcher 4 and Uwe Fritsche 5 - Novemeber 2011 This paper is prepared under the Biomass Futures project funded by the Intelligent Energy Europe Programme. The Biomass Futures project The driving force behind the development and use of bioenergy is the Renewable Energy Directive (RED) 6 which requires Member States to generate 20 per cent of energy from renewable sources by 2020, and for 10 per cent of transport fuels to be made up of renewable resources. The Biomass Futures project aims to assess the role of bioenergy in meeting Europe s renewable energy targets. It does so by conducting sectorial market analyses, estimating the availability of biomass for energy and by modelling the demand and supply of bioenergy within the energy system. These insights will play an important role given the large anticipated contribution of bioenergy in meeting the EU s renewable energy targets. According to analyses of the Member States National Renewable Energy Action Plans (NREAPs), biomass will make up 19 per cent of total renewable electricity in the year 2020, 78 per cent of total renewable heating and cooling in 2020 and 89 per cent of total renewable energy in transport. Altogether, bioenergy is expected to make up over 50 per cent of total renewable energy use. 7 Among other bioenergy carriers that are expected to contribute to this, lignocellulosic ethanol is perceived as an attractive option mainly due to its high potential GHG savings and the minimized land use requirements by increasing ethanol yields per hectare and making use of residual material. 1 Centre for Environmental Policy, Imperial College London 2 Alterra Wageningen University and Research 3 Energy research Centre of the Netherlands, Petten, the Netherlands 4 International Institute for Applied Systems Analysis, Laxenburg, Austria 5 Energy & Climate Division, Oeko-Institut, Darmstadt 6 Directive 2009/28/EC of the European Parliament and of the Council of 5 June 2009 on the promotion of the use of energy from renewable sources and amending and subsequently repealing Directives 2001/77/EC and 2003/30/EC. 7 These figures are taken from http://www.ecn.nl/docs/library/report/2010/e10069_summary.pdf. Another valuable Biomass Futures report based on the 23 NREAPs available at the time of drafting is Atanasiu (2010), The role of bioenergy in the National Renewable Energy Action Plans: a first identification of issues and uncertainties, (http://www.biomassfutures.eu/work_packages/wp8%20dissemination/d8.4%20bioenergy_in_nreapsfinal_08_12_2010.pdf), which focuses on analysing the bioenergy information contained in the NREAPs.

In this framework, RED (2009/28/EC) stipulate that cellulosic ethanol shall count double towards the 10% target. Also the decarbonisation target contained in the Fuel Quality Directive may provide an additional incentive to use cellulosic ethanol. Whilst being an important first step, these two policy measures are not considered enough to create a flourishing EU-based cellulosic ethanol industry, as stated by the European Renewable Ethanol Association (www.epure.org ). The National Renewable Energy Action Plans, submitted by member states to the European Commission within 2010, confirm this. Despite its genuine advantages, cellulosic ethanol is only foreseen to play a marginal role in the EU 2020 energy mix. While a competitive ethanol industry is a prerequisite for the successful rollout of commercial-size cellulosic ethanol plants in Europe, there is a need for additional support measures that target cellulosic ethanol. The purpose of this paper This paper aims to provide concise estimates from the Biomass Futures modelling analysis for the potential contribution of second generation bioethanol (both feedstocks and fuels) to meet the requirements of the RED for 2020. The analysis is performed for EU27 and disaggregated at Member State level. The focus is to set the scene for the European lignocellulosic ethanol potentials and also provide estimations for the potential of importsboth in terms of feedstock and fuel. Scenarios In both estimates (feedstock and fuel) presented in this paper two alternative packages of sustainability criteria are applied: 1) The present RED criteria applied to feedstock for biofuels only. 2) Stricter sustainability criteria applied to all bioenergy feedstock, including solid and gaseous biomass (see Table 1). Table 1: Key assumptions of the reference and sustainability scenarios applied to estimate the EU wide 2020 lignocellulosic ethanol potential (both feedstocks and bioethanol) Reference scenario Sustainability scenario Energy Demand PRIMES reference PRIMES reference Renewable Energy Demand Bioenergy Demand Bioenergy Supply Sustainability criteria NREAPs (2020) + PRIMES reference (for 2030 projection) POLES reference for rest of the world (GLOBIOM) Based on NREAPs (as submitted in 2010) RED sustainability criteria (biodiversity rich land / high carbon stock land) will only be applied to biofuel / bioliquid related feedstocks. Includes existing RED criteria for biofuels and bio- PRIMES reference + NREAPs POLES reference for rest of the world (GLOBIOM) NREAP as starting point then determined by the RESOLVE model Include restrictions on high nature value farmland & GHG balances when deriving the Biomass Futures supply curves Implementation of RED plus criteria developed under the respective Biomass Futures work package:

Imports Policy Instruments liquids Minimum GHG savings High nature value farmland in the EU excluded from conversion Biodiversity constraints on highly biodiverse land outside the EU based on WCMC information Data will be based on GLOBIOM (modelled bioenergy trade data for 2030) as well as CAPRI; Updated in accordance with the NREAPs. A certain degree of policy harmonization will be considered for the post- 2020 period. 1) GHG emission reduction is extended to solid and gaseous biomass in electricity and heat sector, and 2) include GHG emissions from direct and indirect land use change (iluc factor); 3) GHG mitigation requirement of 70% in 2020 and 2030; 4) No use of biodiversity rich land and land with high carbon stock. No sustainability criteria for biomass consumption outside of Europe. GLOBIOM will assess the impacts on EU imports by running the sustainability scenario - with trade vs without trade (of biofuels), and - allowing vs not allowing for land conversion of forests and highly biodiverse lands outside EU 8. RED plus sustainability criteria Lignocellulosic feedstock cost supply curves The lignocellulosic biomass feedstocks available across EU27 are mostly perennial crops, particularly in the Sustainable scenario and residues from forestry and agriculture, in almost equal shares in both of the examined scenarios 9. Agricultural residues represent almost 20% in each of the scenarios and similar to the share for roundwood. The roundwood resource, however, is unlikely to be a competitive feedstock for bioethanol- due to high price and competing uses. Forestry residues (primary- on field; secondary- wood industry process and tertiary) as a total can also cover 26-29% of the total share in the sustainability and reference scenarios, respectively. The major categories of indigenous biomass feedstocks which can support the 2020 lignocellulosic industry, based on the Biomass Futures analysis, are presented in Table 2. 8 Being aware that the conversion of (certain types of) forest and highly biodiverse land is not permitted according to the RED s sustainability criteria, these alternatives are rather meant to be a sensitivity analysis. Results will be used to assess the impact of biomass use in Europe. 9 For detailed explanation of how potential categories were estimated and which data sources were used we refer to: Elbersen, B., Staritsky, I., Böttcher, H., Frank, S. & Naeff, H. (2011). Deliverable 3.3: Spatially detailed and quantified overview of EU biomass potential taking into account the main criteria determining biomass availability from different sources. (expected). When finished available at: http://www.biomassfutures.eu/

Table 2 Domestic lignocellulosic biomass potentials [ktoe] in the reference & sustainability scenario for 2020 in EU27. Category Supply (ktoe) Reference Fraction of total biomass supply [%] Supply (ktoe) Sustainability Fraction of total biomass supply [%] Agricultural residues 59.390 18 59.390 21 Rotational crops 4.591 1 0 0 Perennial crops 57.713 18 46.276 17 Landscape care wood 11.419 4 11.002 4 Roundwood production 56.115 17 56.115 20 Additional harvestable 12 37.871 roundwood 34.973 13 Primary forestry residues 41.186 13 18.738 7 Secondary forestry residues 20.538 6 20.538 7 Tertiary forestry residues 32.628 10 32.628 12 TOTAL 316.861 279.660 The latter domestic potentials are fragmented and of diverse origin based on the current crops in the different Member States (see Figure 1). It is worthwhile to mention that the potentials for 2020 regarding to second generation bioethanol feedstocks slightly decrease for the sustainability scenario, from 317 Mtoe to 280 Mtoe. This reduction is especially caused by reduced potentials for perennial crops, no biofuel cropping being possible under the sustainability criteria of 70% mitigation requirement with iluc compensation, and the sustainable dedicated cropping supply will also be smaller. In addition there will also be a smaller supply from the additional harvestable round wood and a significant reduction (55 %) from the primary forestry residues categories. Figure 1. Maps with geographical distribution of the perennial crops potentials under the reference (left) and sustainability (right) scenarios, as estimated within the Biomass Futures project.

Figure 2. Maps with the geographical distribution of the potentials for straw (left) & prunings (right) under the reference scenario, as estimated within the Biomass Futures project. Regarding to regional distribution, the higher shares for the total lignocellulosic feedstocks occur in France (69 Mtoe), Germany ( 43 Mtoe) and Poland (43 Mtoe) while Italy, Spain and Sweden follow with potentials slightly over 30 Mtoe, UK and Finland just around 30 Mtoe, Romania with 24 Mtoe and the rest of the countries following with smaller potentials from 0,2 Mtoe (LUX) to 13 Mtoe (NL). Potential shares for lignocellulosic ethanol in the fuel mix for 2020 Using the RESolve 10 model, the demand for biomass for electricity, heating and transport as indicated in the NREAPs was analyzed for the Reference scenario. These demand figures are specified for solid biomass, liquid biomass and biogas for electricity and heat respectively, furthermore a 8.9% share of biofuels is assumed 11. The analysis is based on a least costs optimization with respect to a fossil reference. Imports of biomass from outside the EU are allowed. These imports mainly consist of wood pellets, feedstocks for biofuel production and biofuels. The biofuel mix following from this analysis is indicated in Figure 3. 10 The RESolve model has been extended with electricity and heat as compared to the model described in Lensink, S. and Londo, M. (2010): Assessment of biofuels supporting policies using the BioTrans model, Biomass and Bioenergy 34 (2010), 218-226, 2010. 11 According to the NREAPs, 89% of the 10% transport target will be fulfilled by biofuels.

Figure 3. Contribution of different biofuels to the 2020 biofuel mix for EU27, under the reference scenario Conclusions As seen from the analysis, especially in the sustainability scenario, the total supply of the rotational crops will not be sufficient to fulfill the policy demand in the transport sector. This is expected to lead to increased imports of ethanol from mainly Brasil and biodiesel from southeast Asia, Brasil and possibly India if rape based. Preliminary estimations from the Biomass Futures project indicate that approximately 3 Mtoe of biofuels and 23 Mtoe of feedstocks for biofuel production will be imported. However, these imports may be reduced if sustainability criteria also include stronger stimulation of 2 nd generation technology developments making ligno-cellulosic material from domestic sources more likely to be exploited. The preliminary modeling results clearly indicate that most of the cheap domestic feedstock will be utilized (i.e. wastes, landscape care wood, secondary and tertiary forestry residues) to meet the demand and the gap is likely to be filled by imported biomass feedstocks and biofuels. As in the reference also in the sustainability scenario it is not likely that the use of roundwood and additionally harvestable round wood for bioenergy production will increase. Prices for these domestic resources ranging from 9-14 Euro/GJ are expected to remain too high as compared to imported feedstocks such as wood pellets.