Renewable Fuels for Transport

Opportunities & Challenges to Growth

Background: definitions

Biofuels are liquid and gaseous fuels produced from biomass – organic matter derived from plants or animals.

Biomass is any organic matter derived from plants or animals, available on a renewable basis. Includes wood and agricultural crops, herbaceous and woody energy crops, municipal organic wastes.

Conventional biofuel technologies include well-established processes that are already producing biofuels on a commercial scale.

Advanced biofuel technologies are conversion technologies which are still in the research and development (R&D), pilot or demonstration phase, referred to as second- or third- generation. ‘Drop In’.

Background: rationale and status

Rationale: Biofuels provide a way of shifting to low-carbon, non-petroleum fuels, with minimal changes to vehicle stocks and distribution infrastructure .

Global production has grown over the last decade: 16 billion litres in 2000 to 110 billion litres in 2013.

In 2013, biofuels provide 3.5% of total road transport fuel globally.

Biofuels can provide up to 27% of world transportation fuel by 2050.

(IEA, 2014)

Biofuels - uses and feedstocksE

than

ol •Sugar+starch:

•Wheat

•Corn

•Sugar beets

•Sugar cane

•Cassava

•Sweet Sorghum

•Agriculture + forestry residues

•MSW

Bio

die

sel/

HD

RD •Vegetable oils

• Canola

• Soybean

• Camelina

• Carinata

• Palm

• Recycled fats + oils• Algae

Avi

atio

n /M

arin

e • Multiple technology platforms

• Vegetable oils, recycled fats + oils

• Algae

• Alcohols (alcohol to jet)

• Agriculture + forestry residues

• MSW

55.9

111.

4

38.4 4. 3

11

8.3

35.6

2.2

100.4Singapore

18.7

33.6Singapore

26.2Rotterdam

CDA-US Trade Imports Exports

(MG ) 212.2 73.6

4% + LCFS 2% 2% 2%

2-4%*

D – 39*S - 3

D - 39S - 87

D - 10S - 5

D - 6S – 0

D – 6o*S – 80

BIODIESEL/RENEWABLE DIESEL - Import/Export by

Province 2010-2014Q2

149

.9

121.

2

1.1

24

0.7

ETHANOL - Import/Export by Province 2010-2014Q2

8.3

334

.3

3.5Rotterdam

29

5.56

.0

D - 60S - 0

D - 77S - 22 D - 43

S - 90

D - 136S - 34

D – 265+S – 304

8.5%7.5%5%

5% + LCFS

5%

Volumes are minimum RFS, do not capture voluntary blending

D – 0S – 41

D,S – annual Demand, Capacity

CDA-US Trade Imports Exports

(MG ) 1,142.7 14.3

The Low Carbon Suite – British Columbia

Carbon Tax on Fuels 2008 — $5/tonne2012 — $30/tonneApplies to 70% of total greenhouse gas emissions.

Renewable Fuel Standard 20105% gasoline, 4% diesel

Low Carbon Fuel Standard 2010 reportingJuly 1, 2013 into force10% by 2020*

“[O]nly one in ten (10%) of British Columbians were clearly aware of the Regulation prior to hearing it described as part of the survey”

- Ipsos Reid, September 25, 2014

“Three quarters (73%) of British Columbians are supportive of the Renewable and Low Carbon Fuel Requirements Regulation, including one in four (24%) who strongly support it”

- Ipsos Reid, September 25, 2014

Heard of it?

Vancouver Sun, September 24, 2014

BC Low Carbon Fuel Standard

• 10 % reduction of carbon intensity in transportation fuels by 2020 (grams of C02-equivalent per MJ of fuel)

• In force July 2013 (reporting only 2010-2013)

• Separate gasoline and diesel pools

• Biofuels provided 75% of reductions (2010 – 2012)

• Collaboration with Pacific Coast Collaborative Partners (WA, OR, CA)

Broad Range of Low Carbon Fuels

BC RFS/LCFS – Performance by fuel type

> 50% of emissions avoided

“[T]he beauty of B.C.’s clean-fuel regulation is that it traces each fuel to the source. Dirty biofuels don’t receive credit; fuel providers must select fuels that are more environmentally friendly than gasoline or diesel.”

- Michael Wolinetz and Jonn Axsen (Vancouver Sun, Op-Ed, September 24, 2014)

“TOUGH QUESTIONSabout the future of transportation fuels in Canada” – CFA, 2013

IEA –Energy Technology Futures

“Unsustainable pressure on natural resources and on the environment is inevitable if energy demand is not de-coupled from economic growth and fossil fuel demand reduced… The consequences would be significant change in all aspects of life and irreversible change in the natural environment. “

“A global revolution is needed in ways that energy is supplied and used.”

Kent Group Ltd.

Western Canada - diesel supply & demand

Diesel markets in western Canada are ‘tight’

Diesel portion of transport fuel use expected to reach 35% by 2035 (NEB)

Since 1970, the number of operating refineries in Canada has shrunk from 40 to 19

What are biofuels?

Social license – issues check for biofuels

GHG reductions and LCA

Energy balance (ROI)

Food vs fuel (food then fuel)

Land use change

Land ‘grabbing’

Cost of biofuels vs fossil

Sustainability

GHGs and Energy Return

Food concerns, Indirect Effects/ Indirect Land Use Change

Other issues: Increased cost…

Sustainability – risk or opportunity?

Market access issue

GHG performance: carbon intensity (e.g., BC, AB, US, EU, UK)

Sustainability certification is relevant, but it costs, and can make biofuels/bioenergies less competitive

Canadian context Canadian agriculture fares well in global schemes

Export markets attractive through this lens

‘Aggregate’ schemes will realize advantages inherent in Canadian agriculture and forestry (bi-lateral agreements)

Emerging feedstocks/technology – algae/cellulose

Algae (Lipid to renewable diesel/biocrude) Canada not naturally positioned in photosynthetic pathways

‘2G’ algal fuels go directly to hydrocarbon w/o photosynthesis (stunt 1G algal developments?)

Opportunity as biocrude for petroleum co-processing

Uncertainty re: carbon efficiency, sustainability (water, GMO), costs

Cellulose (Sugars to renewable gasoline) Cost of enzymes to liberate sugars in cellular structure coming down

Best models to date co-locate with corn ethanol Shared services; heat from fibre lowers energy costs, Carbon Intensity benefit

GHG

Neutral

‘Sustainable’

Competitive

2025

Drop-In

‘Non-food’

FuelsNew

Technology

& Feedstocks

Investor

Returns

Market

Access

Commodity

Crops

2014

No market, no confidence: why 1G success critical to 2G

Parting thoughts:

Biofuels are a growing part of our transportation fuel supply

Biofuels are produced and consumed across a wide spectrum environmental, social, and economic circumstances (biofuels can be done well, biofuels can be done poorly)

Well designed and implemented policy can enable better biofuels; stability is key

2G (advanced) biofuels must stand on the shoulders of 1G (conventional)

Fred GhatalaWaterfall Groupfghatala@waterfall.ca+1 604.947.0040

Selected Reading:

• IEA Task 39: Commercializing Liquid Biofuels (http://task39.org/)• IEA Renewable Energy Medium Term Market Report 2013

(http://www.iea.org/textbase/npsum/mtrenew2013sum.pdf)• Bc Low Carbon Fuel Requirement Regulation (and associated information)

(http://www.empr.gov.bc.ca/RET/RLCFRR/Pages/default.aspx)• Compliance data results from above

(http://www.empr.gov.bc.ca/RET/RLCFRR/Documents/RLCF-007-2012%20Summary.pdf)

• Vancouver Sun, September 24, 2014, ‘Opinion: B.C. clean fuel regulation works’ (http://www.vancouversun.com/technology/Opinion+clean+fuel+regulation+works/10231994/story.html)

Navius Research, August 2014, ‘The Renewable and Low Carbon Fuel Requirement Regulation: Current Impacts and Future potential of British Columbia’s Transportation Fuel Regulation’ (http://www.naviusresearch.com/data/resources/BC_RLCFRR_Communication_Brief.pdf)