T SEC-BIOSYS : Theme 1.4 Role of International Bioenergy Trade for the UK www.tsec-biosys.ac.uk Miles Perry Centre for E

1. TSEC-BIOSYS: Theme 1.4 Role of International Bioenergy Trade for the UK www.tsec-biosys.ac.uk Miles Perry Centre for Environmental Policy Imperial College, London Biomass role in the UK energy futures The Royal Society, London: 28th & 29th July 2009

2. Introduction • Biomass imports in UK energy – 2000-present • Biomass imports looking to 2020 – analysis using Biosys-MARKAL

3. 2000 -> 2007 Morerenewables (inc. biomass) enter energy system Total Renewable* Total Biomass (all)** Total Biomass (plant&animal) Imported Biomass Biomass Imports as Share of Primary RE 3.15% 9.89% 8.83% 9.97% 7.21% Sewage and landfill up 38% 2000-07 Domestic biomass develops more slowly Biomass Imports go from 0%-10% of RE in 2 years **inc. waste and tyres. excl. liquid biofuels. ‘Primary’ wind counted as electricity generated ** Total biomass = plant-&-animal-based + wood, wood waste, landfill methane and sewage sludge Source: DUKES

4. 2000 -> 2007 Growth Driven by Co-firing Market • Advantages of Co-firing: • Low-cost, low-risk & rapid deployment at the margin • Relative to other technologies • - Technological neutrality of Renewables Obligation • (Destination of 2002 2003 2004 2005 2006 2007 • Plant & animal biomass) • for electricity generation 44% 51% 57% 70% 68% 63% • for co-firing 11% 20% 30% 52% 51% 41% Source: DUKES. % refers to energy content of biomass input

5. 2000-> 2007 Co-firing & Imports More domestic biomass co-fired since 2005? Not so sure… Likely Imports as % of Co-firing feedstock 2005 2007 Palm, olive & shea 52% 47% Wood pellet 12% 14% Sunflower pellet 1% 10% Tall Oil 9% 5% Total74%76% Biomass imports crucial in bioenergy growth from 2002-2003 Source: DUKES & DECC. % of co-firing feedstock refers to mass (tonnes)

6. Bioelectricity & imports 2007 • Imports for co-firing less attractive due to successive RO reforms • ≤12.5% of ROCs can come from co-firing* • (=> uncertainty at the margin) • Dedicated biomass plants receive 3 × more ROCs / MWh • 2006-07: • Ratio falls for the first time • Includes 50% year-on-year increase in combustion of biomass of animal origin • - Imports helpful as bridge towards larger UK biomass exploitation? * - co-firing of energy crops &/or in CHP units is exempt from this cap

7. Bioelectricity & imports post-2007 Dedicated Plant Capacity 30/06/09 197 MW of which 2007-08 additions 78 MW Capacity of additional plants proposed 1,975 MW Assume: Load Factor 80% Avg. Efficiency 30% Annual Feedstock Requirement 183 PJ UK Existing Supply (Biomass Strategy, 2007 234-282 PJ excl. mass energy crop planting) Source: Hawkins Wright, Forest Energy Monitor. OFGEM RO Accreditation Statistics

8. Renewable Heat & UK Wood Pellet Market • Renewable Sources account for <1% of UK heat generation • UK imports of pellet for industrial applications represent significant share of European pellet trade • ~750,000 tonnes consumed (2008) • ~150,000 tonnes used for co-firing (2007) • 600,000 tonnes (~8.5 PJ heat generation) is equivalent to ~1/3 of UK renewable heat consumption in 2007 • UK consumption of high-grade (residential) pellets almost uniquely low in W. Europe Source: DECC (Renewable Energy Strategy Consultation), Pellet@las Project

9. Biofuels in Transport • RTFO year 1 target: • 2.5% of road fuel by volume Source: RFA Monthly Reports

10. Biofuels in Transport • RTFO year 1 target: • 2.5% of road fuel by volume Biodieselfrom UK oilseed rape 26 Ml. [UK feedstock claimed under RTFO 08/09] from UK tallow 5 Ml. from UK used cooking oil 34 Ml. 65 Ml. [UK production – all feedstocks] (EBB) 2008 212 Ml. Bioethanol [UK feedstock claimed under RTFO 08/09] from sugar beet 37 Ml. [UK production – all feedstocks] Bioethanol 2008 75 Ml. • UK Biofuels Sector is Trade-oriented • Imported feedstocks are processed in the UK (vegetable oils, tallow) • &/or • - UK biofuels not produced exclusively for UK road transport market Source: RFA Monthly Reports, European Biodiesel Board, European Bioethanol Industry Association

11. UK Biomass Resources: a snapshot • Imports account for: • 11% - 43% of biomass used in heat & power • (depending on how you define ‘biomass’) • & the vast majority of biofuelfeedstocks in transport • even though UK resources are not fully utilised Source: various reports cited in Perry & Rosillio-Calle. UK Country Report for IEA Task 40. www.bioenergytrade.org

12. UK Bioenergy Trade: Summary • Biomass -> electricity & transport pathways • initially dominated by imports • and integration with existing production and distribution infrastructure • Substantial planned capacity – irrespective of feedstock origin • Electricity: ~2,000 MW dedicated plant planned + co-firing • Transport Fuels: 671 Ml. biodiesel production capacity in 2009 • 820 Ml. bioethanol capacity under construction • What does this mean? • Imports prevent realisation of UK supply potential? • Imports phased-out as UK supply chains develop? • Imports increase size and penetration of bioenergy in the UK? • What about other renewables? Source: European Biodiesel Board, European Bioethanol Industry Association

13. UK Bioenergy Trade: looking forward with MARKAL • Using BIOSYS_MARKAL: • - we can examine the competing merits of imported biomass, domestic biomass and other renewables • - in a realistic energy policy context • The recipe: • 1.) Take Biosys_MARKAL (developed by Jablonski et al.) • & adjust for short-term analysis (2010-2020) • 2.) Create 2 short-term policy scenarios • i) business-as-usual • ii) Renewable Energy Directive • 3.) Examine role of imported biomass

14. UK Bioenergy Trade: looking forward with MARKAL • BIOSYS_MARKAL recap: • Objective: • Minimise discounted total system cost of UK energy provision • subject to: • Satisfaction of energy service demands (GJ of heat, km of travel etc.) • Compliance with technical constraints and policy constraints • UK biomass resource & technology detail from TSEC_Biosys • Biomass import costs & quantities from literature review and consultation with industry experts

15. UK Bioenergy Trade: looking forward with MARKAL • 2 Resource Scenarios: • Domestic Pessimism: • UK Biomass available to energy system cannot exceed 2007-09 levels • (DUKES, RFA) • Domestic Optimism: • Potential 2020 resource fully available • as per TSEC analysis and latest literature • 2 Policy Scenarios: • Business-as-usual: Renewables encouraged by RO and RTFO • Renewable Energy Directive: 15% renewables in final energy consumption • (electricity, heat and transport collectively) • 10% renewables in transport

16. UK Bioenergy Trade: looking forward with MARKAL • 2 Policy Scenarios ctd. • Business-as-usual: • RO as per RO Order 2009 but only partially banded • (by technology but not by biomass crop type) • RTFO fully flexible between biofuels • ≥ 5% liquid biofuel or biogas per litre of road transport fuel • Renewable Energy Directive (RED): • RED requirements applied literally • 15% renewables in final energy consumption • (electricity, heat and transport collectively) • 10% renewables in transport • in addition to BAU policies

17. UK Bioenergy Trade: looking forward with MARKAL BAU Policies, Domestic Pessimism Imported Domestic

18. UK Bioenergy Trade: looking forward with MARKAL Renewable Energy Directive, Domestic Pessimism Imported Domestic

19. UK Bioenergy Trade: looking forward with MARKAL Renewable Energy Directive – UK Biomass Supply 2020 Domestic - Optimism Domestic - Pessimism

20. UK Bioenergy Trade: looking forward with MARKAL Renewable Energy Directive – Biomass Imports 2020 Imported - Domestic Optimism Imported - Domestic Pessimism

21. UK Bioenergy Trade: looking forward with MARKAL Renewable Energy Directive: Transport Markets 2020 Total Renewable Transport Energy Domestic Pessimism: 207 PJ Total Renewable Transport Energy Domestic Optimism: 193 PJ

22. UK Bioenergy Trade: looking forward with MARKAL Renewable Energy Directive: Electricity Markets Domestic Pessimism: Domestic Optimism: • RED scenarios have very little biomass -> electricity • (only landfill gas in 2020) • Presence of imports + full domestic supply -> • less pressure on electricity market to meet RED target

23. UK Bioenergy Trade: looking forward with MARKAL Renewable Energy Directive: Biomass Destination (Primary Energy – feedstock equivalent) Domestic Pessimism: Domestic Optimism: Total: 509 PJ Total: 924 PJ

24. UK Bioenergy Trade: looking forward with MARKAL Renewable Energy Directive: How much biomass is that? PJ (feedstock) Pessimism Optimism Domestic 145 596 Imported 364 328 Total509924 Compared to UK potential: DEFRA Biomass Strategy 346 Compared to present-day use (UK & Imported): Heat & Power (DUKES 2007) 127 Transport (RTFO year 1) 64 191

25. UK Bioenergy Trade: looking forward with MARKAL Can we really import >300 PJ of biomass? - Biosys_MARKAL upper bounds based on literature review. Assuming either: - UK able to maintain global import share (biodiesel, bioethanol) OR - A ‘fair share’ of a global product is available to the UK (based on UK share of Global Primary Energy Supply or global of an equivalent fossil product) - But will this supply actually be realised? valid question for both UK and import markets

26. UK Bioenergy Trade: looking forward with MARKAL Can we really import >300 PJ of biomass? - Biosys_MARKAL has a number of upper bounds for biomass imports. Which of them are binding constraints in RED 2020? Dom. Pessimism Dom. Optimism Palm & Olive   Ethanol   (cane, starch & cellulosic) Biodiesel FT liquids  Wood-derived Biomass  (higher level constraint) Wood pellet  • In both scenarios, imports are dominated by biodiesel & wood (chip, pellet) • Potential biodiesel imports are not fully taken-up • Potential wood imports fully taken-up only when domestic wood is scarce

27. Conclusions • Imported biomass has been crucial to the development of bioenergy in the UK (by volume at least) • Imported biomass must be viewed in an energy-wide context • (it’s linked to the UK biomass sector • but capable of developing on its own) • UK biomass if exploited would be competitive with imports at current prices. (cellulosic -> heat: waste -> AD) • Even if UK biomass exploited, imports can be complementary • Imports can reduce reliance on other renewables for RED • Biodiesel imports dominate regardless • But how sustainable can imports be at this scale?

28. Thank you for your attention! www.tsec-biosys.ac.uk miles.perry@imperial.ac.uk