Cellulosic Ethanol: An Assessment of the Potentia l Market in Belize

1. Cellulosic Ethanol:An Assessment of the Potential Market in Belize Mark Lambrides and Kevin de Cuba Energy and Climate Change Division Organization of American States (OAS) With Financial Support Provided by: the Government of Canada - DFAIT

2. What are our objectives for today’s workshop? • Present the findings of our initial assessment on the potential for Belize to develop and consume cellulosic ethanol • Discuss issues surrounding the opportunity • Review possible next steps if pursuing cellulosic approach • Discuss other possible avenues for ethanol production (i.e. 1st generation cane to ethanol) • Discuss broad renewable energy needs/plans for Belize • Consider future interventions/support from OAS and/or other institutions

3. How did we get here today? • Project designed and funded (OAS and Canada/DFAIT) • Initial desk study and telephone interviews (July 2008) • 1st Stakeholder Consultation (August 2008) in Belize City

4. 1st Stakeholder Consultation - Participants

5. Field Visits / Stakeholder Interviews • In August 2008, team of specialists from OAS met with key stakeholders before and after the consultation to obtain in depth briefing and collect key data

6. How did we get here today? (2) • Incorporation of input from consultations into technical report • Elaboration of analysis • Input from technical consulting firm – Hart Energy • Production of draft assessment (White Paper)

7. CELLULOSIC ETHANOL

8. General Transportation Sector Conditions • A vehicle fleet of approximately 54,225 (2007) • Gasoline consumption of 12.6 Million gallons (2007) -> Projection of 13.9 Million gallons (by 2012) • Gasoline prices dependant on international petroleum prices • Very volatile petroleum prices US$ 30-148 per barrel during last 5 years • Leading to volatile gasoline prices -> US$ 0.78 (Dec 24, 2008) – 3.41 (June 12, 2008) per gallon!! (SPOT prices, NY Harbour) • Retail prices in Belize -> Import price (whole sale) + Taxes/Duties/Levies -> US$ 2.28 – 5.00 per gallon (Retail Prices)

9. What is Cellulosic Ethanol? • 1st generation, conventionalethanol is derived from the accessible sugars from starches • 2nd generation, cellulosic ethanol is derived from a wide variety of sources of cellulosic plant fiber (cellulose/hemicelluloses) • Feedstocks may come from a wide range of stalks and grain straws and several kinds of agricultural and forestry residues • Also, the organic fraction of municipal waste (paper, yard waste, food waste, sludge…) may also be used as a feedstock

10. What are the potential advantages of cellulosic ethanol over 1st generation ethanol? • Eliminate the Food vs Fuels challenge • Cellulosic biomass residues are abundant and conversion into ethanol can represent an alternative to waste handling/treatment • It is friendlier to the environment: less GHG emissions during the production phase • It does not constitute a threat to biodiversity: there is no need for single-crop farming practice • Support the agriculture sector: can be an aggregated value to farming

11. Increasing technology development and reducing costs Laboratory scale research and process development Pilot scale process development and demonstration Demonstration scale plant (2008) Commercial launch 2006-2008 2012+ 2000 2004 What is the Status of Cellulosic Ethanol Technology Today?

12. Cellulosic Ethanol – The Biochemical Process Hydrolysis on pretreated lignocelluloses materials, using enzymes to break complex cell walls, thereby providing access to the sugars followed by fermentation and distillation

13. Cellulosic Ethanol – The Thermo-chemical Process • Also involves breaking down biomass into its elemental components by using heat and chemical synthesis • The carbon in the raw material is converted into synthesis gas (Syngas) through a heat process • The syngas is converted either through a catalytic reaction or by bacteria into various products such as ethanol

14. CELLULOSIC ETHANOL IN BELIZE • POSSIBLE FEEDSTOCKS • POTENTIAL YIELD • ESTIMATED COSTS

15. Possible feedstocks in Belize (2008 conditions per sector; MT)

16. Other input factors • The average cost of collection and transport of the feedstock is estimated to be in the range of US$22.0 – 56.7 US$ per ton • These values are calculated for transport distances ranging up to 52 miles radius (85km) from collection point to processing plant, where 90% of all available cellulosic biomass feedstock in Belize is available for collection or harvesting

17. Critical feedstock density and transport distances to a centralized CE processing plant in Belize

18. Potential sustainable cellulosic ethanol yields

19. Cost comparison of Sustainable CE production cost in Belize by Technologies Figure 2. Cost breakdown for the average production costs through a biochemical conversion (2008) Figure 3. Cost breakdown of the production costs of CE through a thermo-chemical process (2008)

20. Cost comparison of Sustainable Cellulosic Ethanol production Figure 1. Cost breakdown comparison between Belize (error bars for uncertainty in feedstock costs) and literature reported CE production costs vs. Gasoline NYC international spot prices (average value from 2004-2009; uncertainty range represents the lowest and highest values in the market in the last 5 years; Today’s market price is also represented)

21. Cost comparison of Sustainable Cellulosic Ethanol production

22. The Way Forward…

23. The Future Role of Ethanol in Belize • By 2012+ cellulosic ethanol may offer the potential to produce up to about 60 million gallons/yr of ethanol at <$1.50/gallon…. • Offers potential to satisfy 10% of the gasoline market as an E10 blend and… • Still offer over 46 million gallons of ethanol for export • Creates added value for agriculture and forestry sectors • Address critical challenges for municipal waste • Creates new jobs and economic development potential • Great local and global environmental opportunity

24. What are the key challenges to this future? • Market uncertainty • Uncertain markets for ethanol; oil prices; other alternative fuels/vehicles; carbon markets; global economic crisis… • Technology uncertainty • Cellulosic technology commercialization and deployment; Feedstock supply; early access to technology… • Current domestic energy policy environment • Lack of overall energy policy/plan; lack of targeted incentives for ethanol/renewables; no mandate for ethanol blending in gasoline… • Lack of experience/precedent in this arena • No history with ethanol production; minimal experience with climate change mechanisms…

25. Key tools to overcome challenges…Ethanol Market • Consider near term development of 1st generation cane – ethanol development • -Mitigates uncertainty with respect to 2nd/3rd generation ethanol • -Helps to establish physical market conditions for ethanol production • -Gain experience in production, use, blending, and export of ethanol (for example: CARICOM-Canada; CAFTA; CBI; EU…) • -Offers potential for future upgrade of production facility • Establish policy/regulatory conditions for ethanol market • -Consider comprehensive biofuels policy that addresses production and consumption • -Incentives for production • -Market tools/infrastructure • -Regulations: Production licenses; forestry management; feedstock handling • -Fuel standards • -Mandate for E10, other blending requirements?

26. Ethanol in the wider sustainable energy context • Is Belize interested/committed to a transition toward sustainable energy? • If the answer is yes…then may wish to consider: • National Sustainable Energy Policy/Plan • Build on past efforts (i.e. UNDP) • Assess renewable energy resource potential • Alternatives for sustainable energy finance (i.e. MDBs, Carbon Finance, Private Sector, etc.) • Multi-stakeholder collaboration to establish targets, plans, the way forward…

27. Principal Ministry in charge National Energy Policy National Sustainable Energy Plan Renewable Energy Specific Legislation National Energy Committee Regulatory Body PPAs Regulations IPPs Best practices framework for promoting sustainable energy

28. Thank You! DSD Energy Team Mark Lambrides mlambrides@oas.org Kevin de Cuba kdecuba@oas.org Francisco Burgos fburgos@oas.org Carolina Pena cpena@oas.org Juan Cruz Monticelli jmonticelli@oas.org Charlene Solozano csolozano@oas.org Ruben Contreras usdecpr5@oas.org Mauricio Solano usdeint1@oas.org Mark Lambrides Chief Energy and Climate Change Division T: +1-202-458-6261 E: mlambrides@oas.org Kevin de Cuba Energy and Environmental Specialist T: +1-202-458-6467 E: kdecuba@oas.org URL: www.oas.org/dsd