The Role of Bioenergy in IEA s Medium-Term Renewable Energy Market Report 2015 Adam Brown and Pharoah Le Feuvre Renewable Energy Division International Energy Agency Danish Bioenergy Association Meeting Assens, 3 December 2015
Role of Bioenergy in IEA ETP Scenarios IEA: Energy Technology Perspectives 2015 Bioenergy is largest primary energy carrier in 2 DS in 2050 OECD/IEA 2014
Renewable electricty generation growing steadily Generation (TWh) 8 000 7 000 6 000 5 000 4 000 3 000 2 000 1 000 0 Renewable generation by technology (2005-20) Share of bioenergy in non-hydro renewable generation 54% Historical 28% Forecast 22% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Hydropower Bioenergy Onshore wind Offshore wind Solar PV Geothermal STE Ocean The share of non-hydro renewable electricity generation is rising. however bioenergy s share drops due to faster growth of onshore wind and PV.
Medium-term market overview for bioenergy electricity by region TWh Bioenergy generation by region (2006-20) 700 600 500 400 300 200 100 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 OECD Americas OECD Asia Oceania OECD Europe Africa Asia China Non-OECD Europe Non-OECD Americas Middle East As growth slows in some major OECD bioenergy markets, higher levels of generation are anticipated in certain non-oecd countries with abundant resources and policy drivers.
USD 2014/MWh Increased competition from other renewables Historical and forecast global weighted average generation costs for new onshore wind and PV plants vs. selected reference bioenergy LCOEs 400 350 300 250 200 150 100 50 0 2010 2015 2020 2010 2015 2020 Dedicated biomass Co-firing (woodchips & pellets) Wastes & residues Emerging Technoligies e.g. gasification Onshore wind Solar PV - utility scale Selected bioenergy technologies Aenerobic Digestion High levels of incentives are no longer necessary for solar PV and onshore wind in many markets. Support for bio-electricity focussing on the most cost-efficient applications.
Notable marketplace adjustments 2014-15 Country Revision Canada Coal to biomass conversions stimulated by phase out of coal in Ontario. Brazil Korea Germany Poland United Kingdom Recent renewable energy Power Purchase Agreement (PPA) auctions held over the 2013-14 period offered more favorable terms to bioenergy projects. Annual increase in requirements of Portfolio Standard (RPS) for 13 largest power companies drives biomass co-firing. Downward FIT adjustments, removal of some project-specific bonus tariffs, restriction of new capacity eligible for support to 100 MW per year until 2017, with support then phased out entirely for new plants above 100 kw. Support for biomass will reduced in existing green certificate scheme. Restrictions increased on volume of certificates awarded for co-firing. No budget allocated for conversions within the initial Contracts for Difference (CfD) auction round (besides two coal projects already confirmed), and changes introduced which alter support for biomass unit conversions under the Renewables Obligation scheme. Climate Change Levy exemption for renewables removed. Diverse policy adjustments affect bioenergy prospects in key markets. Market Impact
Billion litres mb/d Stabilisation of global biofuels production anticipated World biofuels production by volume 2008-20 160 140 120 100 80 60 40 20 0 2005 2007 2009 2011 2013 2015 2017 2019 United States biofuels Brazil biofuels OECD Europe biofuels Rest of the world biofuels 2,5 2,0 1,5 1,0 0,5 0,0 Global conventional biofuels production forecast to stabilise over the medium-term.
2007 = 100 Mandates effectively support global biofuels production Comparison of global biofuels production and oil prices 2007-20 (indexed) 250 200 150 Historical Forecast MTRMR 2015 global biofuels production 100 Forward assumption 50 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 IEA crude oil import average price Blending mandates support demand, even with a low oil price environment.
Policy landscape for biofuels dynamic over 2014-15 Country Revision Volume Required Brazil Ethanol blending mandate increased from 25% to 27.5%, biodiesel mandate increased from 5% to 7%. India Ethanol blending mandate increase to 10%. (proposed). Indonesia Biodiesel blending mandate raised from 10% to 15%. Malaysia Biodiesel blending mandate increased from 5% to 7% in some regions. South Africa The United States E2 (2% ethanol) and B5 (5% biodiesel) mandates scheduled to come into force in the fourth quarter of 2015. RFS 2 proposed volumes for renewable fuels, advanced biofuels and cellulosic ethanol in 2014-16 period revised down from statutory levels. Biofuels produced from starch-rich, sugar and oil crop feedstocks and cereal crops The European capped at 7 pp of the overall EU 10% target for renewable energy in transport for Union 2020. No specific sub-target for transport in the 2030 Energy Strategy. Germany Climate Protection Quota introduced to replace 6.25% biofuel quota obligation.? Strengthening of biofuels policy support evident in new and emerging markets within non-oecd countries, while policy uncertainty present in key OECD markets.
Early commercialisation in the advanced biofuels sector Commissioned commercial scale advanced biofuel plants Advanced biofuels needed for long-term decarbonisation of the transport sector are starting to scale up.
Gasoline USD / Litre Production costs assessment for cellulosic ethanol Analysis of a breakeven crude oil price for cellulosic ethanol 1,40 1,20 1,00 0,80 0,60 0,40 0,20 Achievable with industry expansion? 2014-15 industry focused figures 0,00 40 50 60 70 80 90 100 110 120 130 140 150 160 170 180 190 200+ Crude oil price Wholesale gasoline price (USD 10 margin) Advanced biofuel cost estimate (adj. for energy content) Production costs for cellulosic ethanol anticipated to be above 2015 oil prices, but significant cost reduction potential identified within the industry.
EJ Further policy support required to accelerate growth in renewable heat 20 18 16 14 12 10 8 6 4 2 0 Consumption of modern renewable energy for heat 2008-20 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Geothermal Solar thermal Modern bioenergy Challenges persist to increasing the contribution of renewables and decarbonising the heat sector, however established renewable heat policies have proved successful.
Thousands Euro cent / kwh Lower heating oil prices mean increased competition for domestic biomass systems Medium-term forecasted growth in wood pellet system installation (left) and delivered domestic fuel cost comparison 2012-15 (right) in Austria 190 170 150 130 110 90 70 50 30 Source: AIBIOM (2015) Historical Forecast 2012 2013 2014 2015 2016 2017 2018 2019 2020 Total installed wood pellet stoves Domestic <50kW wood pellet boilers 9 8 7 6 5 4 3 1Q - 2012 3Q - 2012 1Q - 2013 Domestic heating oil Natural gas 3Q - 2013 1Q - 2014 3Q - 2014 1Q - 2015 Consumer wood pellets Downward movement in heating oil costs has reduced running costs from oil-fired heating systems and closed the fuel price gap to pellets.
Biomass Supply Source: Adapted from IPCC (2011), and supplemented with IEA data c. 150 EJ needed to supply transport and heat and power needs (8-11 billion tonnes) Around ½ from residues/wastes, ½ from crops
IEA Biofuel Roadmap - Vision Biofuel supply grows rapidly and reaches 32EJ in 2050 Diesel/kerosene-type biofuels particularly important to decarbonise heavy transport modes Large-scale deployment of advanced biofuels will be key
Bioenergy must be part of a broader context? Bioenergy heat & power Coproduction with biobased materials Biofuels Environmental services (emissions reductions, wastes) Integration with agriculture and forestry - coproducts and residues Source: IEA (2014), Energy Technology perspectives 2014
Conclusions Renewable growth continues despite low fossil fuel price context and policy uncertainties The effect of the lower oil price environment is less pertinent for bioenergy for power, but biofuels and heat sectors are impacted in some circumstances Bio-electricity faces potential competition from lower cost renewables, with opportunities focused on low cost and well integrated projects Continued policy action is needed for heat and biofuel sectors. Policy uncertainties risk undermining investor confidence and are dampening growth Good progress in commercialisation of cellulosic ethanol and significant cost reduction potential but long term policy and market framework uncertain Slow commercialization of thermal processes and energy crops Integration is the key!
For further insights and analysis The Medium-Term Renewable Energy Market Report 2015 was launched on 02 October 2015 and can be purchased online at: www.iea.org Thank you for your attention!