10.05.2005 / Hamburg2/ENFA-Workshop Folie 1 European Non-Food Agriculture E N F A University of...

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European Non-Food AgricultureE N F A

University of Hohenheim, Germany,Jürgen Zeddies and Oliver Henniges

Kick-off-MeetingMai 9th – 11th 2005

Hamburg, University

Work Package 25 Bioethanol and Biodiesel

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• Cost and potential of bio ethanol and biodiesel• Regional dimension

• EU-15, NUTS 2• Different raw materials

• Wheat, sugar beets, maize, potatoes

Proposed activities in the application

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• Farm accountancy data network (FADN) of EU-15 (1997- 2002)• Data available • About 60 000 farms

• Calculation of gross margins (ARACOST)• Accomplished by standard data for sugar

beet• To be completed for wheat, maize, others

Methodology

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• Type of model already available • Comparative static approach

• Results: variable cost, opportunity cost, marginal cost for different raw materials

• Time dimension• Base 1997 – 2002• Reference 2008• Prognoses up to 2020

Cost of raw material

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• Biodiesel: RME and by products for Germany• Bioethanol: distinguished by different raw

materials, and technical processes (DDGS, biogas)• For Germany • For main competitors worldwide

Cost of conversion

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• Raw material (oilcrops, cereals, beets)• Regional dimension

(Germany, EU-15, and EU-28)• Assessment of supply elasticities

Assessment of production potential

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• National markets (Germany)• EU domestic market• World market

Markets for biofuel

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• Which kind of raw material should be considered? Potatoes? Sunflower ? Soy beans?

• Can other lines for biofuel be ignored (sun fuel)?

• Regional dimension: EU-15 or EU-28?• Definition of time horizon (base, reference,

prognoses?• Should greenhouse gas emissions in conversion

processes considered as well?

Open questions for the study

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• German Ministry of Environment …. “Cost and potential of biomass”

• German Ministry of Environment ….“Macro economic study of biomass for energy”

• Oliver Henniges: “Bioethanol – Worldwide analyses of competitiveness”

• DFG-Project Zeddies: “Mitigation strategies for green house gas emissions in agricultural”

Links to other projects

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• Data flow• Potential for biomass from agriculture

• Germany• EU-15 and EU-28• Biodiesel (RME)• Bioethanol

• Production cost international • World trade / world production• World market price• Models for bio fuel markets

First results

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Supply elasticity in der EU 15

Increase on Price level

Cereals Oilcrops Sugar beets

partial aggregated partial aggregated aggregated

0 - 10 % 1,31 0,65 2,97 2,33 2,8

10 – 20 % 0,0157 -0,010 0,05 -0,13 1,34

20 – 30 % 0,0136 -0,022 0,03 -0,11 1,23

30 – 100 % 0,0057 -0,010 0,016 -0,13 0,59

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Supply potential for energy crops in Germany (base 1000 t)

cereals oilcrops sugar beets total

base base change in production

base change in production


base 42391,32 3923,42 26751,8 73066,57

base with put set aside

1029,1 1110 3643,28 5782,38

Without surplus production - wheat and rye - beet and milk

-5560 -562

-- -259,49

-8340 -4389

13900 5210,49

total 42391,32 7151,1 3923,42 1369,49 26751,8 16372,28 24892,87

change in production in %

16,9 34,9 61,2 34,1

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Supply potential for energy crops in EU-15 (base 1000 t)

cereals oilcrops sugar beets total




base 201456 12812 1135,33 327801

base with put set aside

11250 3084 15960 30294

Without surplus production - cereals - beef and milk

-26106 -5840

-- --

-30174 --

56280 5840

total 201456 43196 12812 3084 113533 46134 92414

change in production in %

24,1 24,1 40,6 28,2

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Angebots-/Nachfrage-M enge

Preis [¢/l]

Verbraucherpre isfür B enzin

50

Im portE infuhr-G etre ideZuckerrübe

Eth

an

ol-

Nac

hfr

ag

e

Im portkontingentf. zo llfr. E thanol

In landsgetr.

(z o llfre i )

Ethanolherkunft

Ethanol-Angebot

fre i Tankste lle

Im porte thanol

(verzo llt)

Im po rtethanol-Angebot

E thanolangebo t

fre i Ra ffin

erie

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Angebots-/Nachfrage-M enge

Preis [¢/l]

Verbraucherpre is

für B iodiesel

50

Stillegungsfläche500 Tsd. t

G etre ide500 Tsd. t

Treibstoffherkunft

2 %

de

s D

iese

lver

bra

uch

s

Angebot frei A bnehm er

frei Verbraucher

Im port

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• Share of renewable energy of primary energy consumption in 2010 up to 12 %

• Similar goals in member states• Various initiatives in member states to reach

these goals

• Germany: Renewable Energy Law (higher price for supplier)

• Exemption from mineral oil tax

Biomass for energy ?Political decisions in EU

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• Wood• Agricultural by products (straw)• Liquid energy from crops

(bio diesel/RME, ethanol• Biogas

Resources

Heating facilities for wood pellets

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Biomass from:

• Wood, primarily old wood from buildings

• Agricultural by products (straw)

• Liquid bio energy

• Biogas

Markets for bio energy- Electric Energy -

0

10

20

30

40

50

60

70

80

90

100

110

120

2000 2001 2002 2003 2004

Anla

genanza

hl [

–]

0

100

200

300

400

500

600

700

800

900

Leis

tung [M

W]

Kleiner als 5 MW Größer als 5 MW

Leistung

Biogene Festbrennstoffe

Electricity plants for biomass

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0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

2 000

2 200

1999 2000 2001 2002 2003 2004

Anla

genanza

hl [

–]

0

20

40

60

80

100

120

140

160

180

200

220

240

260

Leis

tung [M

W]

Größer als 500 kW 70 kW bis 500 kW Kleiner als 70 kW Leistung

Biogas

Electricity plants from biogas

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• Bio diesel from oil crops

• Ethanol

• Synthetic fuel (biomass to liquid)

• Biogas

Markets for bio fuel

0

200

400

600

800

1 000

1 200

1996 1997 1998 1999 2000 2001 2002 2003 2004

Pro

dukt

ionsk

apazi

tät bzw

. A

bsa

tz [1 0

00 t/a

]

J ährlich installierte Kapazität

Gesamte installierte Kapazität

Biodieselabsatz

Biodiesel

Bio diesel plants capacity

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Bio fuel in Germany

• 2004 only rape seed oil (RME) as poor fuel

• About 1.2 mio t from about 750.000 ha

• Little natural rapeseed oil in tractors

• 2004 three factories are producing ethanol from cereals

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• Kyoto Protocol CO2 reduction

• Energy (in-) dependence

Concrete EU target regarding biofuels:

5,75 Energy-% in 2010

Further Challenges:• Jobs in rural areas• Market relief for agricultural commodities• Alternative incomes for farmers• Maintenance of sugar beet cultivation

Why Bio ethanol?

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Why 100 % Tax Reduction in D?

EU Commission agreed with tax exemption, since

Production Costs = 69 Cent/l

107 Cents/l

= Gasoline price at that time

No further calculations cited

Officially no overcompensation of production costs difference

only 65 % volume based energy density

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Tax Relief in the EU

Valid untilCountry [%] [EUR/hl] [Year]

Germany 100 65,45 2009

Sweden 100 52,50 2008

Spain 100 39,60 2012

France 63 37,00 -

UK 42 33,00 2010

Relief

Source: FO Licht, Ethanol Production Costs – A Worldwide Survey

Bio ethanol Requirements

EU Directive 2003/30 EG

Share of renewable energy in fuels in

2006 2,00 % (+0,75 % points/year)

2011 5,75 % ( 8,8 Vol.-% )

For Germany that means:

Gasoline consumption 2003: 25,7 Mio t

2,00 Energy % 10,5 Mio hl 5,75 Energy % 30,3 Mio hl

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Required LandAssumption: 5,75 energy-% ethanol blend

Potential ethanol demand EU-25 (acc. to COLBERT): 132 mln hl• Cereals 85 %: 112 mln hl• Sugar beet 15 %: 20 mln hl

Raw material requirement:• Cereals 31,8 mln t• Sugar beet 19,9 mln t

Required land 6,4 mln ha• Cereals 6,1 mln ha• Sugar beet 0,3 mln ha

Total agricultural area EU-25: 167 mln haSet aside area EU-25: 7,0 mln ha

Data according to COLBERT, D: EU Need for Biofuel Import? FO Licht World Ethanol Conference 2004, London, 9. Nov. 04

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World Production by Country

Source: Dr. Christoph Berg, FO Licht, World Ethanol Conference 2003

EU need in 2010: 130 mln hl

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International Trade

4.16 mln hl

4.77 mln hl

Now: 1

.5 m

ln h

l

Plann

ed M

erco

sur C

ontin

gent

12

mln

hl

Source: FO Licht, Germany

For comparison:

World Production 400 mln hl

CBI: 2.66 m

ln hl

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Bio ethanol in Germany

today...

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Production Costs Germany

Assumptions:• Multiple feedstock plant

a) 0,5 mln hl/yearb) 2,0 mln hl/year

• Raw materialBeet campaign (90 days): beet juiceRest of year: wheat 64 % ethanol from wheat, 36 % from beet

• Wheat Price: 100 €/t Beet Price: ?

Production Costs Germany(pWheat = 100 €/tincl. transport)

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Please contact Prof. Zeddies (zeddies@uni-hohenheim)

or Oliver Henniges (henniges@uni-hohenheim)

for further information regarding this slide

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Beet Price?




Production Costs in D(pWheat = 100 €/tincl. transport)

Folie 37




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Bio ethanol

in

Brazil

Brazil

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Production Costs Bio ethanol BR




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Production costs Brazil (2003)

14 €/hl !




Bagasse Burning

Folie 42

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State Support in BR

• Mandatory blending

20-25 Vol-% depending on market situation

• Tax reduction (2003)

Gasoline: 30 US-Cents/l

Ethanol: 17 US-Cents/l

• Small car tax reduction

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Bio ethanol in Brazil

• Low feedstock costs

• Largest producer worldwide

• Large potential for expansion

• Large-scale facilities for export exist

• Rising demand by Total Flex Cars

Serious competitor for EU production

International Comparison of Production Costs

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Competitiveness against Gasoline in Germany

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What about the competition of biomass for nutrition and energy?

• 1. Relevant variables• The demand for nutrition

• Population growth• Per capita consumption

• The world market prices for agricultural commodities• The supply elasticity for biomass

• 2. Expectations for the next 20 years• population growth

• World 1.1 %• EU 28 0.3%

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Price developments

• 1. Oil price• Increase of ca. 50 % in 25 years• Absolute 18 to 28 US $

• 2. Cereals• Increase of 10- 20 % in 15 years

3. Oilseeds• Decrease of 13 to 27 % in 10 years

4. Sugar• constant

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Production and agricultural surpluses in EU

• Food demand + 0,3 %/year• Production + 1.5 to 2 %/year• Set aside land 5 to 7 %• Potential relief of land from surplus production 5%

Total balance of land for biomass in EU 25 • in 10 years about 22 %• In 20 years about 35 %

10.05.2005 / Hamburg2/ENFA-Workshop Folie 1 European Non-Food Agriculture E N F A University of...

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