Bioenergy Sustainable Development - Abengoa€¦ · Bioenergy Sustainable Development ABENGOA 31...

Bioenergy Sustainable Development

ABENGOA Activity Report 200527

Abengoa Bioenergía is its holding company. The Business Unit is dedicated to theproduction and development of biofuels for transport, bioethanol and biodiesel, amongothers that utilize biomass (cereals, cellulosic biomass, and oleaginous seeds) as the rawmaterial. The biofuels are utilized for ETBE production (gasoline additive), or for directblending in gasoline or gas oil. Given that they are renewable energy sources, biofuelsreduce CO2 emissions and contribute to the security and diversification of the energysupply while reducing the dependency on fossil fuels utilized in the transport sector andhelping towards compliance with the Kyoto Protocol.

Europe’s largest bioethanol producer (340 million liter productioncapacity) and fifth in the US (415 million liters)

With biomass... we produce ecologic fuels and animal feed

www.abengoabioenergy.com

Bioenergy



Organization

The Business Unit comprises the management of thefollowing companies:

Ecocarburantes Españoles, S.A.Ecoagrícola, S.A.Bioetanol Galicia, S.A.Biocarburantes de Castilla y León, S.A.ETBE Huelva, S.A.Abengoa Bioenergía, S.A.Abengoa Bioenergy CorporationAbengoa Bioenergy FranceAbengoa Bioenergy of HanoverAbengoa Bioenergy R&D IncorporationGreencell, S.A.

United States

Abengoa Bioenergy Corporation has continuedbuilding the leadership infrastructure during 2005that will provide the base for its growth during thecoming years as the Bioethanol industry experiencesrapid growth in the United States. The followingduring this period is the most noteworthy:

• Portales expansion activities continued withexpected completion by year end.

• Completed financing of the Ravenna project andconstruction of the plant initiated.

• Management and direction teams completed atplant and corporate levels.

Europe

The most notable milestones reached during theyear 2005 were the following:

• ETBE Huelva implementation• 85 Ml signed in export markets.• AB Bioenergy France Project obtains 40,000 tons

of tax concession 2007-2012.

• Agreement with Cepsa for the construction of abiodiesel production plant in the grounds of theRefinery “Gibraltar” of Cepsa in San Roque(Cadiz). The investment anticipated for the plant is42 million euro.

• Creation of the European Association ofBioethanol Producers (e-Bio)

Research and Development

Abengoa Bioenergy R&D, Inc. is a subsidiary ofAbengoa Bioenergy Corp (ABC).

ABRD’s efforts are focused on four high priorityprojects:

• Improve actual production process yields and co-product quality at existing dry-mills.

• Increase ethanol capacity and develop new feedco-products.

• Develop and demonstrate cost competitivetechnologies for new biomass facilities.

• Develop demonstration programs which permit anincrease in the field of ethanol utilization (i.e.,e-diesel and hydrogen fuel cells).

ABRD is leveraged by grants from the U.S.Department of Energy, the European Union andvarious ministries within the Spanish Government.Greencell, our affiliate in Spain, is responsible for themanagement of our European activities, reporting toABRD.



Operations in Europe

Introduction

Abengoa Bioenergía is the European leader in theproduction of bioethanol for use as a biofuel and itpresently operates with two plants in Spain,Ecocarburantes Españoles, in Cartagena (Murcia) andBioetanol Galicia in Teixeiro (Coruña), which have atotal installed capacity of 150 and 176 million litersannually, respectively.

It also operates with Ebro Puleva a third plant inBabilafuente (Salamanca), Biocarburantes de Castilla yLeón, with a production capacity of 200 million litersannually, of which 5 million litres will be obtainedfrom the conversion of biomass from cereal by meansof a new technology which is being developed byAbengoa Bioenergy R&D.

The construction works continue developing in itsfinal part, in accordance with the revised programwith the incorporation of the modification of theAlcohol Park, to adapt it to the logistical requirementfor distribution of the final product.

It is therefore hoped to shortly start the tests of thedifferent plant installations which will conclude withthe implementation of the largest bioethanolproduction plant in Europe.

The Business Plan of Abengoa Bioenergía includes thepromotion and construction of two new bioethanolfrom cereal plants in Europe. This year (2005),Abengoa Bioenergy France has submitted a proposalto the French Government for the construction of aplant which will produce 180,000 tons per annum ofbioethanol, in the town of Lacq, in the southwest ofFrance. The plant would commence operation in2008, using more than 400,000 tons of corn perannum, which the local cooperatives of Aquitaine andMidi Pyrenees would supply.

Abengoa Bioenergía, the leader in Europe forbioethanol production, has a share (51 per cent) inAbengoa Bioenergy France, created on the second ofMarch 2005 and will manage and control it. Thefollowing also have shares: Dyneff, the leadingindependent distributor of oil products in France;Aquitaine Industrie Innovations, a capital risk

company specialising in renewable energies andinnovation; Agpm, a French national association ofcorn producers; and Euralis, Etablissement Lacadee,Lur Berri, Maisadour and Vivadour, the main graincooperatives in the region.

Main milestones (industry, legislative andinternal)

Industry:

• Exports of bioethanol to Belgium (8 million liters),Germany (44 million liters) and France (33 millionliters).

• Development and promotion of Flexible FuelVehicle FFV (E85) fleet in Spain.

• Commercial agreements with the main oilcompanies which operate in Europe.

• Agreement with Cepsa for the construction of abiodiesel production plant in the grounds of theRefinery “Gibraltar” of Cepsa in San Roque (Cadiz).The investment anticipated for the plant is of 42million euro.

Legislation:

• EC Directive 2003/30 for the promotion and use ofbiofuels approved. This is the first time that aEuropean Directive has governed the minimumconsumption of renewable energies in eachMember State.

• As a result of applying this Directive, each MemberState will be obliged to comply with the objectivesset out by the EU. This means that, as at 31stDecember 2005, 2% of fuels for transport must bethrough biofuels, increasing gradually to 5,75% inDecember 2010.

• New European Regulations concerning the PACand energy crops.

• Legislation and implementation with regard to theissue of rights for CO2 emissions.



Production Ecocarburantes Bioetanol Galicia ETBE Huelva Total

Bioethanol (m3) 131,904 171,588 0 303,492

DDGS (Tm) 120,186 110,965 0 231,151

Exportedelectricity (Mwh) 124,912 165,264 0 290,176

ETBE (Tm) 0 0 43,491 43,491

Operational results of the plants (bioethanol, DDGS - refined corn grains dried withsolubles and production of electricity)

• Development of specifications for bioethanol in theCEN of the EU.

Internal:

• Termination of the construction of the biofuelsplant of Biocarburantes de Castilla y León inSalamanca. It will start operating in 2006.

• Awards through tenders for alcohol wine from theEU as a raw material for the plants ofEcocarburantes Españoles and Bioetanol Galicia.

• Implementation of the Integrated ManagementSystem implemented in each of the companies ofthe Business Group.

• Development of a Risk Management policy in thecompanies subject to commodities volatility.

• The World Biofuels conferences were held for thefourth consecutive year.

Ethanol Contract Highlights

The bioethanol plants of Abengoa Bioenergía inSpain, Ecocarburantes Españoles and BioetanolGalicia, have a surplus production capacity thatallows the exportation of this surplus production tocountries of the European Union. A significant factorin the competitiveness of the supply based on theseexports is the reliability and flexibility of this and alsoof the capacity to introduce into the market a largevolume of bioethanol of a high quality, arising fromthe improvements made in the production processand from an efficient operation in AbengoaBioenergías´ plants.

During 2005, Abengoa Bioenergía has achievedcontracts for the supply of bioethanol in the EU for atotal of 85 million liters. Exports of bioethanol in thenext five years to cover demand in the EuropeanUnion are a key factor in the Abengoa BioenergíaBusiness Plan.

New Projects

The Business Plan for Europe also includes thepromotion and construction of two new bioethanolplants in Europe. The first of these projects is a plantwhich will produce 180,000 tons per annumsituated in the south of France, which will beoperational in 2007. The second project in Europe isin the promotion stage and will be operational atthe beginning of 2009. These projects have beenactivated following the recent guidelines approvedby the European Directives for the Promotion andTaxation of Biofuels and the implementation thereofin the Member States.



US Operations

Introduction

Abengoa Bioenergy Corporation presently is the 5th

largest producer of Bioethanol in the United States.We presently have over 110 million gallons ofinstalled capacity from three plants in operation andhave a project underway to add another 88 milliongallons in early 2007. During 2005 we havedeveloped relationships and now have as customersmany first class refiners offering ethanol blendsprimarily in E10 and soon E85 markets. Total sales ofethanol into these markets totalled over 98 milliongallons in 2005.

2005 has been a year of transition for AbengoaBioenergy Corporation. We have strengthened ourmanagement team with key additions while alsobuilding upon our competency program for allemployees that was launched in 2004. The rapidgrowth of the industry will continue to providechallenges for us as we strive to be a market leaderin the United States. Our competency models andtraining programs including partnering with localcolleges are projected to attract top talent tosupport our growth.

Milestones Achieved

Industry

The U.S. ethanol industry continued its rapidexpansion during 2005 with 11 new plants comingon line. Operating plants now total 92 in numberwith installed capacity in excess of 4.2 billiongallons. This represents an increase of approximately600 million gallons since January 2005. Anadditional 23 plants with additional capacities of 1.4billion gallons per year are currently underconstruction.

Legislation

After 3 years of attempts, the U.S. Congress finallypassed a comprehensive Energy Bill in July of 2005.The bill includes a Renewable Fuels Standard whichsets mandatory, increasing inclusion rates forrenewable based fuels (principally bioethanol andbiodiesel) beginning with a 4 billion gallon requiredusage in 2006 and culminating with 7.5 billiongallons in 2012. The bill does not include a ban ofMTBE, but does eliminate the OxygenateRequirement of the Reformulated Gasoline Program(RFG), effective 270 days after enactment (May2006), but incorporating “anti-backsliding”provisions which will prevent increases in gasolineemissions and encourage continued use of ethanolin RFG.

Although the Energy Bill as passed does not includea nationwide phase out of MTBE, 25 states (5 morestates than in 2004) have currently passed legislationbanning the use of MTBE individually. With thepassage of the energy bill, and the elimination ofthe oxygen requirement, there is much less reasonfor oil companies and refineries to use MTBE, and itis expected that MTBE use will be eliminated at aneven faster rate than before. Other key provisions ofthe Energy Bill include the establishment of a 30%tax credit up to $30, 000 for the cost of installingclean fuel refueling equipment, such as an E85 fuelpump.



Production York, NE Colwich, KS Portales, NM Total

Bioethanol (mm gals) 57.3 23.5 17.5 98.3

DDGS (Dry tons) 174,230 70,620 90,650 335,500

Plants Operations Results

Internal

Key accomplishments for 2005 include;

• Successful financing of Ravenna project andconstruction of the plant initiated.

• We have continued with the Portales PlantExpansion tuning to 30MMGPY.

• Management and direction teams completed atplant and corporate levels.

• Our York plant achieved an all time monthlyrecord production exceeding typical rates by morethan 8%.

• We have developed an Employee Handbook whichpresents policies procedures and standardpractices.

• We have established improvements in our riskmanagement policies and have plans forcontinuous improvement of these programs.

Ethanol and Co-Product Market Overview

The overall complexity of energy markets hasprovoked extreme volatility in 2005 with prices thathave no connection with previous trends. Unrest inthe Middle East resulted in the highest priceincreases in history and then further exacerbated bythe devastating damage from hurricanes to bothnatural gas and refineries in the Gulf.

Both of these circumstances drove all energy valuesto all time record highs with ethanol values topping$2.20 per gallon. We predict that the ongoingsubstitution of MTBE coupled with continuedinterest in E85 will sustain demand and pricing forethanol in 2006. Market reports indicate that about4.2 million gallons of MTBE will be replacedprogressively in the following years.

Abengoa has continued its strong presence in themarketplace by maintaining relationships to supplythe top refineries and traders. We have ongoingdiscussions with the largest refineries in NorthAmerica and, over 65% of our contracts have beensigned with important clients in the complex energysector.



We are extremely pleased with our 100% customersatisfaction rating in 2005 with no customercomplaints and our consistent on time delivery ofproduct.

Co-product marketing remains a key factor withinthe ethanol industry in the United States. With ourcommercial network located at each of our facilitiesour goal is to develop and sustain close andeffective partnerships with our customers to provideboth efficient and quality service. We continue toevaluate the quality of our feed products and byemploying our state-of-the-art evaluations in R&D,where we are striving to provide further guidance toindustry standards related to these products, and soprovide added value. Our active participation incommercial groups, along with our relationship withuniversity feed programs and studies demonstratesour commitment to our customers and theimprovements they seek for their animal nutritionneeds.

New Projects

The Ravenna project is well underway. The start-upof the 88 million gallon per year facility is foreseenfor the first quarter of 2007.

We have two additional projects underconsideration in 2006 that could further increaseour presence and supply possibilities for theAmerican Market. We are very enthusiastic aboutwhat these projects might offer and we have highexpectations that they will enter the next stage ofdevelopment in 2006.

We are presently providing E85 to a limited numberof distributors. Our plan in 2006 is to leverage ourcapabilities and presence in the industry and utilizethe supply of E85 as a growth engine for Abengoa.We are developing a series of market evaluationsthat we believe will provide insight and direction tothe approaches we should pursue in this market.



Research and Development

Main Strategic Milestones Achieved

Residual Starch

Process improvements helped to achieve yields ofmore than 2.9 gal/bu. from the more than 100 pilotplant corn data trials. Implementation of theseimprovements at one of Abengoa’s pilot plants showthat these expected benefits can be achieved on alarger scale. An ASPEN process simulation model hasbeen developed and is being used to assess theimpact of the improvements.

Pilot plant samples of new co-products wereanalyzed and found to have improved nutritionaland physical properties.

Trials were completed moreover with barley and rye.Testing of wheat is underway and the nutritionalproperties derived from these raw materials areunder investigation.

Co-Products

The initial construction phase of the starch pilotplant included equipment to process and fermentresidual starch contained in the cereal. Subsequentto this phase, an expansion plan was implementedand completed giving the starch pilot plant theadditional capacity to extract ethanol fromfermentation (distillation columns), to separateliquids from solids, post distillation (centrifuge) anddrying of the solid material (dryer). This expansionallows the starch pilot plant the capacity to carry outtests and evaluations in each phase of the starch toethanol process.

With the completion of the expansion of the starchpilot plant, testing was carried out on multipleprocess parameters. In conjunction with NovusInternational, the resulting co-product from thesetests was characterized and evaluated via detailedand multiple chemical analysis. Based on the resultsof these trials, the value of the resulting co-productwas determined.

Biomass Enzymatic Hydrolysis

- Bench Scale Investigation

Bench scale investigation and evaluation of keytechnologies: biomass fractionation, enzymaticcellulose hydrolysis, ethanol fermentation werecompleted by ABRD partners (SunOpta, NREL,Auburn University, and Novozymes). ABRD formedpartnership with NatureWorks to develop yeaststrains for improved fermentation efficiency ofbiomass hydrolysates. ABRD also developed Aspensimulation models to evaluate various processoptions.

- Pilot Plant Development

SunOpta complete vendor equipment testing offeedstock milling, pumping, mixing and filteringpretreated biomass slurries.



Based on bench scale research and pilot plantequipment test results, ABRD is developing a basicengineering design package for the York BiomassPilot Plant. The package includes: PID, PFD, processdescriptions, equipment specifications, and generalequipment layout. Several engineering companiesand system integrators are being evaluated forproviding detailed engineering design, procurement,and construction management services.

Fabrication of long lead equipment and constructionof biomass pilot plant building has commenced.Installation of pilot plant equipment will be carriedout in two phases: Phase one is scheduled to becompleted by May 2006, and Phase 2 by Septemberof the same year.

Biocarburantes de Castilla y León

ABRD and Harris Group completed the basicengineering design of a 5 million L/year straw-to-ethanol commercial demonstration plant usingAbengoa Bioenergy R&D proprietary processtechnologies. This plant is integrated with a 195-million L /yr cereal ethanol plant in Babilafuente(Salamanca), Spain. The objective is to develop anddemonstrate economically viable biomass ethanoltechnologies.

Abener Energia S.A. has been selected as theEngineering Procurement and ConstructionCompany responsible for managing the detaileddesign, equipment procurement and installation.ABRD oversees the process technical lead during thedetailed design and construction, andcommissioning phases.

Abener has subcontracted Idom (Spain) to providethe detailed engineering design and evaluation ofequipment bids. An agreement was signed withSunOpta to supply feedstock preparation andpretreatment equipment. Long-lead equipment hasbeen ordered. Bids for other equipment are beingobtained from various vendors.

Site preparation and civilwork started inSeptember 2005. Theplant is scheduled tobegin operation in early2007. It would be thefirst large-scale biomassethanol demonstrationplant in the world.

Gasification andCatalysis

ACES is a research project that is being carried outwith the CSIC, in the ICP (Institute of Catalysis andPetrochemistry) facilities in Madrid, where otherABRD projects are being developed as well. Themain objective of the ACES project is thedevelopment of a catalyst for ethanol productionfrom syngas, which consists mainly in a mixture ofcarbon monoxide and hydrogen. This is the criticalstep in the thermochemical pathway for ethanolsynthesis from biomass.

The Aces project is progressing with testing ofvarious catalyst compositions. The project has led tofinding a class of catalysts with promising resultsand potential for further improvement.



The catalyst will be tested in different conditions byAsociación de Investigación Industrial de Andalucía(AICIA) within Biocomb project, funded by theSpanish government.

In order to assure a detailed study of the catalyticsynthesis of ethanol from syngas and theimprovement of the catalysts at the necessary levelfor economical application, a project with a fewresearch partners was organized in the US and wasselected for a financial award by Department ofEnergy.

Gasification of biomass produces syngas, which canbe used either for the catalytic synthesis of ethanolor for heat and power production. Gasification isstudied under the European Renew program in theSixth Framework program. We are investigating atthe same time different gasification technologies todetermine their suitability for the gasification ofagricultural residues.

Fleet Demonstration (E-diesel, FFV, E95)

E-diesel is a blend of ethanol with diesel that couldbe used in diesel engines without modifications,improve the environmental performance of theengines and could increase the ethanol market.

As a previous step to fleet demonstrations, lab andmotor tests have been developed both at Cidaut andUniversidad de Castilla La Mancha. The results showthat the emissions are reduced greatly, mainlyparticulate, HC, CO and Nox emissions.

A part of the development will benefit from a grantfrom Spanish Profit program.

Fuel Cell

Ethanol reforming is a promising way to gethydrogen from a renewable source, and a patentedcatalyst, owned by Abengoa bioenergy, has beensuccessfully tested at pilot and lab scale. Abengoa

Bioenergy initiated this project four years ago todemonstrate the viability of bioethanol as hydrogensource.

Abengoa Bioenergy is going to construct and test ademonstration plant for ethanol reforming and hasfinished the design and initiated the constructionthat will be finished at the beginning of 2006, withan ambitious test program.

The project is developed in collaboration with thecatalyst and Petrochemical Institute (ICP) of CSIC,which has developed the catalyst and has tested thelab and pilot plant with Abengoa Bioenergy...

Energy Crops (Profit)

Jerusalem Artichoke and sweet sorghum are twosugar content crops promising to producebioethanol. To implement them as raw material it’snecessary to determine how cultivate, when collectand which is the yield. This works needs fielddemonstration developments that are beingaccomplished within the project.



Workforce in Spain

Spain

Ecocarburantes Españoles 75

Bioetanol Galicia 77

Biocarburantes de Castilla y León 103

Corporate Abengoa Bioenergía y Ecoagrícola 30

Total workforce in Spain 285

Workforce in USA

USA

Colwich 46

Portales 56

York 60

Corporate USA 40

Ravenna 5

Total workforce in USA 207

The project is funded under the Profit program andis being developed in collaboration with UPM(Universidad Politécnica de Madrid) and InstitutoTecnológico Agrario de Castilla y León (ITACyL).

New Projects

I+DEA project presented to Cenit call for proposals

Abengoa Bioenergy is leading a project in lookingfor three main objectives:

• Develop lignocellulosic energy crops• Develop gasification and catalytic ethanol

synthesis• Develop ethanol market through ediesel

The project has been launched to Cenit call fromproposals, funded by CDTI, and the partners in theproject are: for energy crops are Asaja, Agenciaandaluza de la Energía, Syngenta and Oryzon. ForGasification and catalysis Agencia Andaluza de laEnergía and Solutex. And for ediesel Cepsa, Tussam,Auvasa, and Ciudad Real Council.

The project indeed introduces different PublicResearching Centers like AICIA, CSIC, ITACyL,CENER, ITAP, Ciemat, UCLM, Cidaut and Universidadde Comillas.

Singular Strategic Project (PSE) on energy crops

Abengoa Bioenergy and some of its subsidiaries takepart in this project that has been funded by theSpanish Government to develop energy crops fordifferent applications. Abengoa Bioenergy leads thedevelopment of starch crops for ethanol production.

In the project there are several partners, but in thestarch energy crops evaluation the main are ITACyLand Asaja.

Alliances and Partnerships

Alliances

ABRD has entered into a strategic alliance this yearwith O2Diesel to provide funding and commercialsupport to develop the European market. ABRDcontinues its alliance with Novus (productcharacterization, proof-of-concept, field evaluationand commercialization of new feed products).

Partnerships

ABRD continues its partnership with Novozymes(enzyme application), Genencor (enzyme supplier),Auburn University (analytical support), NREL(pretreatment, AspenPlus Model, NIR RapidAnalysis), and NatureWorks (fermentation).

Bioenergy Sustainable Development - Abengoa€¦ · Bioenergy Sustainable Development ABENGOA 31...

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