Executive summary (1/2)
1
• The EU has set an ambitious target to reduce GHG emissions and oil dependency
• The key to achieve this goal is to establish a biobased economy that focuses on replacing oil in all applications
including plastics, chemicals and other materials
• Europe is well positioned to spearhead the development of a new bioeconomy1 with world leading companies in the
biochemical industry and strong agricultural industry
• However, the EU risks falling behind the US, Brazil and China as the development of the bioindustry is facing a major
barrier due to the lack of demonstration facilities to mature technologies and commercialization
• It is urgent for Europe to capture the economic and environmental benefits arising from its research investments
• There is a gap in demonstration scale second generation biorefineries focusing on the production of high value
products like chemicals, materials and fibres
• The industry is willing to invest but lacks public funding support to realize projects
• The bioindustry has come together to promote this goal (e.g. via EuropaBio)3
• The ambition is to see at least two lignocellulosic demonstration scale integrated biorefineries within the following
value chains:
• Biological enzymatic conversion of agricultural residue, hard wood and energy crops into C5 and C6 sugars
and ultimately chemicals, materials and energy. The investment would be approx. € 25-50 million2 per
biorefinery
• Thermochemical conversion of wood and black liquor into chemicals, materials, fibres and energy. The
investment would be approx. € 150-200 million2 per biorefinery
The climate
challenge
Europe has
great
potential but
risks falling
behind
Gap for
demonstra-
tion
biorefineries
focusing on
non-energy
1. Defined as an economy that does not base itself on oil but on renewable biomass. This includes bioenergy, biomaterials, chemicals, etc.
2. Rough estimate for new demo biorefinery the size of 10 tons of dry biomass per day for biochemical and 100 tons per day for thermochemical
3. However, the group present is mostly focusing on biochemical conversion as there are few representatives of the forest based sector. This group is
therefore keener to support a biochemical conversion facility.
Executive summary (2/2)
2
• To avoid falling behind the global competition, Europe needs to start demonstration activities as soon as possible
• In the short-term the best option is to join the European Industrial Bioenergy Initiative (EIBI) to establish integrated
demonstration scale biorefineries producing both bioenergy and biochemicals/materials.
• This will imply establishing several smaller consortia with bioenergy producers and other key stakeholders around
targeted value chains
• In the medium to long term (funding windows opening 2013) the most attractive option is to foster the launch of a
tailored European Biorefinery Initiative (EBI) similar to EIBI but focused on non-fuel biorefineries in the biobased
economy
• The bioindustry along with Research Technology Organizations (RTOs) and member states in dialogue with
EC could establish a European Biorefinery Initiative (wider than EIBI, focused in the biobased economy)
under the European Strategy for Bioeconomy. The outcome of this process remains uncertain
• Alternatively establishing a PPP or encouraging a joint FP8 call for demonstration scale biorefineries could be viable
options
• Both PPP and FP8 are in the process of being defined and the outcomes remain uncertain
• Previous PPPs (called JTI) have been deemed bureaucratic and are not likely to continue. The EC asks for
input to redesign the PPP facility
• Using FP8 for biorefinery investment would require an expansion of funding eligibility from research to Capex
• The industry needs to collaborate to establish the framework for these funding opportunities
• These funding options leave room for multiple sub-consortia to establish different demonstration facilities tailored to
their demonstration needs without compromising IP
• These consortia will define detailed technical design and locations for demonstration facilities according to their
members’ priorities
• Industry’s immediate next steps are to align on the strategy to pursue
Join the EIBI
Start
dialogue for
FP8, PPP or
a tailored
European
Biorefinery
Initiative
(EBI)
Joint effort
for multiple
demo
projects
Agenda
3
1. Vision
2. Design and cost
3. Funding options
4. Location analysis
5. Governance models
6. Implications and implementation plan
Annex A: Back ups
1. McKinsey growth scenario for WEF, ADL “Green Boom” scenario
Source: World Economic Forum, McKinsey
2nd generation biofuels are needed to address a range of global challenges
4
The world is facing many severe challenges… … that 2nd generation biofuels can help to
address
• Threat of climate change and environmental
degradation
• High volatility of energy, commodity and food
prices
• Economic dependency on foreign oil / lack of
energy security
• Global economic slowdown / recession
• Address climate change through emission
reductions (GHG potential of -60% to -100%)
• No competition with food security (e.g. 1st
generation crops)
• Stimulation of economic growth in agricultural
and biochemical industries (“green” growth), with
economic potential estimates of $300-400 billion1
• Decrease of oil dependency from high risk
countries
Note: By 2020, the EU expects 20 percent of its power to come from renewables, part of which will have to be delivered by power derived from
biomass. Additionally, 10 percent of all transportation fuels should come from renewable sources, which will require a substantial increase in
penetration of bio fuels
Europe is well positioned to exploit the bio-opportunity, but risks falling behind
other countries
5
Europe is well positioned to spearhead
development of a 2nd generation bioeconomy….
… but risks falling behind Brazil, China and the
US
• Sophisticated agricultural sector with large
availability of feedstock
• Strong network of biochemical clusters
• Strong commitment to GHG reduction
• Dominant market position in key technologies
and inputs (e.g. Enzymes, biotechnology)
• Strong commitment to stimulation of EU R&D
agenda in general and the knowledge-based bio-
economy in specific
• Brazil, China and the US invest heavily in
biorefineries from an economic and global
security perspective
• A substantial part of their funding is directed at
closing the gap between research and
commercial application
• Strong progress on first generation biofuels
• High ambitions and targets for the replacement of
fossil transportation fuels
• Government support (e.g. through public
technology grants) and tax credits
• Large-scale investments in biorefineries, often
with participation of EU based companies
implying a substantial risk for Europe losing the
knowledge it has invested in building through
research
• However, they are mostly focused on biofuels
and less on other products leaving an attractive
niche for Europe
Brazil, China and the US are making significant public investments in bringing
biorefineries to commercial scale
61. Estimated funds provided by FP6 and FP7 to biorefinery-related projects
Source: US Department of Energy, EU, World Economic Forum, Bio-economy.net
CHINA
• Large-scale investment in
biorefineries
• Plan to substitute 20% of
crude oil imports by 2020
• Target of 1.7bgy ethanol
by 2010
US
• High targets for the
replacement of fossil
transportation fuels
• Wide range of
support schemes
including grants, tax
credits, loan
guarantees, etc
• Focus: bioethanol
• Public support last 5
years: ~ € 1.2 billion
BRAZIL
• World leading first generation biofuel
production
• Some commercial 2G bagasse
refineries in operation
• Aggressive government growth
targets for bioethanol by 2025
EU
• High targets for the
replacement of fossil
transportation fuels
• Focus: biodiesel/
biochemicals
• Public support last 5 years1:
~€ 200 million
For example the US has multiple support mechanisms for the biorefinery
industry focusing on demonstration and commercial application
7
* Impact to date – some programs have only been starting slowly and are therefore not showing too much impact yet
Source: interview with BIO; Dalberg analysis
US approach to
biorefineries
• Mainly for solving
national security
issue of foreign
oil dependency
• Focused on
biofuels and
bioethanol in
particular
• Started under
Bush
administration
and continued
under current
• Support
programs
boosted with the
Economic
Recovery Act or
2010 granting
USD 564 million
to biorefinery
projects
De
ma
nd
Su
pp
ly
Program (start year)
• Renewable Fuel
Standard
Description
• Goal to produce 36 billion
gallons of biofuels by 2022
Government
institution
• US gov
EstimatedImpact* Potential
Low
High
• Bio-preferred
procurement (2002)
• Act to favour biobased
products over alternatives in
public procurement
• Dep. Agriculture
• Bio-preferred labelling
(2002)
• Cataloguing and labelling
products based on biorefinery
ingredients
• Dep. Agriculture
• Biomass Crop
Assistance Program
(2008)
• Lucrative support for farmers
to transition to energy crops
• Dep. Agriculture
• Biomass Program • USD 2-300 million per year
support to 2nd generation
biorefineries (mainly demo)
• Dep. Energy
• Clean Energy Loan
guarantee (2007)
• Loan guarantee to finance
commercial scale biorefineries
• Dep. Energy
• Biofuels Loan
guarantee
• Loan guarantee to finance 2nd
generation biorefuel plants
• Dep. Agriculture
• Corn Ethanol tax
Credit
• Applies to all biofuels
• 0.45 $/gallon
• IRS
• Cellulosic Ethanol tax
Credit
• 1.01 $/gallon production tax
credit terminates 2012
• IRS
Overcoming the gap from research to funding (called the “valley of death”)
requires co-investments from public and private stakeholders
8Graphics: Mercer
Research
and
Development
Demonstration Deployment Diffusion
Governments Markets
Financing,
technology,
ideas
Nu
mb
er
of
pro
jects
2nd generation biorefineries align with EU priorities, but demonstration-scale
biorefineries are needed to overcome the valley of death
9
• The EU has defined three ambitions for 2020,
which are linked to the biobased economy and 2nd
generation biorefineries:
1. Smart growth: developing an economy based
on knowledge and innovation
2. Sustainable growth: promoting a more
efficient, greener and more competitive
economy
3. Inclusive growth: fostering a high-
employment economy delivering social and
territorial cohesion
• There is much research related to 2nd generation
biorefineries in Europe (see next slide)
• However, there is a “valley of death” between
early stage research and commercialization that
requires intervention, especially outside the bio-
fuel space (sustainable chemicals, biomaterials
and fibres)
• This project is a feasibility study to investigate the
opportunities to promote demonstration scale
integrated lignocellulosic biorefineries in Europe
• This report lays out the vision, technical value
chains and capital investments required as well as
the funding options, implications on governance
and implementation paths
Strong alignment with EU core priorities…. … but interventions need to be targeted, and
aligned with other initiatives
Current landscape of biorefinery initiatives in Europe
10
Source: Star Colibri, Dalberg research
Funding mechanisms
Fuel
Chemicals
Mixed outputs
Research Pilot Demonstration
European
Union
Europe
Company
EIBI
FP6 - FP7
Inbicon Biogasol Brensbach
NSE Biofuels Abengoa
BioAmber Solvay Roquette/DSM
Bio T-Fuel FMS Innventia
Chemrec ARD Biodemo
GoBioGas BPS TMO
Inbicon
DTU/BioGas
Procethol 2G
Sekab
Icelandic biomass
Biorefinery Ireland
BioMCN
Nuon
Europe BioHub Rotterdam
Leibniz Inst fuer Agrartechnik
Icelandic biorefinery
BioBase Europe
CPI
Research projects
• Belgium (>20)
• Finland (>50)
• France (>20)
• Germany (>10)
• Sweden (>10) National funding (e.g. FNR - Germany, Nordic Energy
Research, BOF - Belgium, BBSRC -UK, etc.)
NER300
EuroBioRefBioCore
BioSynergy
BioCoup
SupraBioSupraBio
EuroBioRef
• Europe is still far from a biobased economy despite the number of initiatives and funding mechanisms:
• Most facilities focus on biofuels
• Most funding is for research activities, rather than demonstration facilities
NOT EXHAUSTIVE
BE Basic
Sud Chemie
Sud Chemie
Establishing a strong biobased economy in Europe would have significant
impact on the environment and oil dependency…
11Source: EuropaBio
Less petroleum used in the production of
plastic from natural feedstock (corn)
Less emissions in the production of
propanediol from natural resources
• Industrial biotechnology will bring environmental advantages to a number of industries (e.g. plastic
production, textile, pulp and paper production industries, biofuels, etc.)
• Despite the early-stage technology, biotechnology already shows environmental benefits when
compared to business as usual processes based on oil–derived chemicals
… and create employment and jobs
Note: The numbers of biorefineries are determined by the ability of each region or member state within the EU27 to supply bioproducts. Jobs in the
chart represent the total man-years of employment between 2010 and 2020, not the number of jobs in 2020 alone. Included jobs are in management,
operation and construction of the biorefineries. Revenues are per year
Source: Bloomberg
12
Potential socio-economic impact of 2nd generation ethanol on EU in 2020
• Building a strong
biobased economy in
Europe will create
both revenues and
jobs directly and
indirectly
• Next to direct jobs, a
biobased economy
will also increase
farmer income and
improve economic
activity in developing
rural regions
Agenda
13
1. Vision
2. Design and cost
3. Funding options
4. Location analysis
5. Governance models
6. Implications and implementation plan
Annex A: Back ups
Technical design and capital investment summary
14
• There is significant technological and commercial uncertainty (and diverging opinions) on the most promising
technologies and feedstock to create the 2nd generation biobased economy
• Project participants have different aims with regards to "what to prove" in a demonstration biorefinery
• Different foci along the value-chains (e.g. input, conversion technologies, output)
• Diverging preferences between testing specific proprietary technologies vs. testing the overall paradigm
• Different approaches to proprietary information and intellectual property
• The focus on different stages of the value chain encourages collaboration. However, to accommodate the other
differences, at least two facilities are needed:
• Biological enzymatic conversion of agricultural residue, hard wood and energy crops into C5 and C6 sugars
and ultimately chemicals, materials and energy. The investment would be approx. € 25-50 million1 per biorefinery
• Thermochemical conversion of wood and black liquor into chemicals, materials, fibres and energy. The
investment would be approx. € 150-200 million1 per biorefinery
• However, given the group involved there is divergence on the specific technical design, which should probably be
resolved in smaller consortia
• A joint, consensus-focused design would probably be a slow process and might lead to an ineffective and
expensive compromise
• Our recommendation would be to work through competing sub-consortia (potentially including other stakeholders)
• Choice of technical design should be driven by the desired output production in the sub-consortia and the feed
stock available in the chosen region
1. For a new biological enzymatic biorefinery the size of 10 tons of dry biomass per day the capital investment required will be in the range of € 25-50
million. For a new thermochemical facility at 100 tons per day the capital investment is likely to be € 150-200 million. If feasible to build on existing
facilities investments required will drop substantially
Observations on capital requirements
15
The economies of scale, learning and scope of
biorefineries….… point towards at least two pilot scale refineries
• Strong economies of scale: A facility twice the
size will only be ca. 1,6 times the cost (scaling
factor of about x0,7)
• Strong economies of learning: The first ever
facilities built will be considerably more expensive
than later facilities. Similarly, building on existing
facilities will allow building on accumulated
knowledge and skills
• Low economies of scope: There are hardly any
investment synergies to co-locating a full
biochemical and thermochemical biorefinery
• Synergies of co-location: Expanding / adjusting
existing facilities can significantly lower the
investment required
• Ideal demonstration scale depends on product:
Size required for demonstration depends on what
needs to be demonstrated for further scale up
which will vary greatly with product and technology
• To test both the biochemical and thermochemical
value chains, it will be necessary to establish at
least two specialized facilities
• As the demonstration scale facilities will be first-
of-a-kind, and relatively small, they will be more
expensive per unit produced than later facilities
• Building on existing facilities will lower capital
investment required significantly
Value chains agreed and capital investments needed
16NB: The biochemical conversion does not include facilities for on-site enzyme production
Source: Capex survey, technological survey, team analysis
Must have
Nice to have
Feed stock
Conversion
technology Output Size
Capex estimate
(new biorefinery)
• Agricultural residues,
e.g. Wheat straw,
bagasse etc.
• Biological enzymatic
conversion
• Steam explosion
• Waste treatment
• Fine chemicals
• Bulk chemicals
• Heat & power
• Materials
• Biofuels
• 10 tons of
dry biomass
per day
• € 25-50 million
• Hard wood /
processed residue
from paper industry
• Municipal waste
• Algae
• Energy crop
• Thermochemical
route in parallel
• Biological acidic
• Combustion
• Gasification
• Fermentation
• On-site enzyme
production
• Additional feed
stock + € 3-12
million
Sugar based biochemical integrated biorefinery
Must have
Nice to have
• Forest resources
• Black liquor
• Biological enzymatic
conversion
• Pyrolysis
• Gasification
• Fibres
• Chemicals
• Materials
• Biofuels
• 100 tons
of dry
biomass
per day
• € 150-200
million
• Multiple wood types • Integrated
biochemical
conversion
Thermochemical integrated biorefinery
Investment breakdown per value chain
17Source: Capital Investment survey among experts, interview with Andritz, analysis of existing biorefineries
Sugar based biochemical integrated biorefinery, 10 tons of dry biomass per day
€ 7-12 million € 5-25 million € 10-15 million
Total cost
€25-50 million
BACK UP
Storage Syngas Ethanol
→ → → Fibre → → → Biodiesel
Ashes & impurities Chemicals
Fibre materials
Conversion of stillage ...
+ +
Crushing Thermal treatment Synthesis Destillation
Thermochemical integrated biorefinery on wood, 100 tons of dry biomass per dayTotal cost
€150-200 million
~€ 30 million € 70-100 million € 40-70 million
1. Feedstock handling 2. Hydrolysis Intermediary product 3. Upgrading End products
Storage Fermentable sugars (C5,C6) Ethanol
→ → → → Lignin → → → Biodiesel
Chemicals
Fibre materials
Waste water treatment Heat
Conversion of stillage Power
+ +
Pre-treatment Hydrolysis Fermentation/
combustion/
estherfication/
Crushing Distillation
Alternative: Build on existing facilities
18
Co-locate with
complementary
industrial facilities
• Pulp & paper production
• Heat & power
• Agricultural processing,
e.g. mills, first generation
biorefineries, etc.
• Savings on capital
infrastructure such as:
• Silos for feedstock
storage
• Boilers
• Power plants
• Waste water
treatment facility
• Access to feedstock
supply
• Savings of 20-80% of ’new’
capex cost depending on
level of synergies
Examples Synergies achieved Reduction of Capex needed
Build on existing
demonstration
scale biorefineries
• CPI
• BE Basic
• Bio Base Europe
• BioDemo
• Reduction in Capex
(almost no investment
needed except
modifications to existing
plant)
• Reduction in time to start
testing operations
• Leverage skilled staff and
experience build
• Savings of 50-90%
estimated depending on
match of current facilities
Agenda
19
1. Vision
2. Design and cost
3. Funding options
4. Location analysis
5. Governance models
6. Implications and implementation plan
Annex A: Back ups
Funding options – executive summary
20
• The large size, significant risks, system-wide benefits, and positive externalities linked to biorefinery investments point
towards a pooling of private and public investments
• EU has funded biorefinery related research in various ways
• FP7 invested €182 million in biorefinery-related projects, incl. €53 million to SupraBio, BioRef, EuroBioRef and
StarColibri
• FP6 allocated €14.6 million to Biosynergy and Biocoup
• European structural funds support biorefinery-related projects as well
• Member states have been the main public funding source, supporting ~80% of EU biorefinery related projects
• However, most biorefinery-related funding has been dedicated to biofuel projects and research activities, rather than non-
fuel products and demonstration scale testing
• The European Industrial Bioenergy Initiative (EIBI) is the best option in the short-term. A tailored bioindustry initiative (EBI)
would be better in the long-term. FP8 or PPP funding in the long-term are potential long-term options as well
• The EIBI is already underway and is likely to open up funding before 2014. Although primary focus is on bioenergy, there is
funding space for the biochemicals and materials
• A tailored bioindustry initiative (EBI), the FP8 and PPP require changes to current programs and the outcome is uncertain
• A tailored bioindustry initiative build on the model of the EIBI would be a new initiative and as such the success is
depending on broad support
• Previous PPPs (called JTI) have been deemed bureaucratic and are not likely to continue. The EC asks for input to
redesign the PPP facility
• Using FP8 for biorefinery investment would require an expansion of funding eligibility from research to Capex
investment
Key assumptions behind recommendations
21Source: Interviews with steering group members, steering group meetings, Dalberg analysis
• The global competition for successful technologies
based on lignocellulosic feedstock is fierce and
time is a factor
• It will be valuable to engage in short-term
opportunities for demonstration
Urgency
• The stakeholders involved in this project want to
see integrated lignocellulosic biorefineries at
demonstration scale in Europe and they will
cooperate to promote it
• However, companies are also representing
competing technologies. Funding options should
accommodate multiple consortia of stakeholders
Collabora-
tion and
competi-
tion
• Demonstration of technologies is the crucial last
step before commercial application. The large size,
significant risks, system-wide benefits, and positive
externalities point towards a pooling of private and
public investments to overcome the “valley of
death”
Scarcity
of
resources
Funding options should:
• Fit the technical requirements
• Accommodate multiple consortia and
multiple facilities to test competing
technologies
• Leverage funding from both the EC and
member states
• Allow industry co-funding across the
value chain to pool resources and
expertise
• Focus on short-term options as well as
long-term
Assumptions Design criteria
• Not all stakeholders involved are interested in
owning and running a demonstration facility longer
term
Long-term
ownership
Criteria to evaluate options
22
Fit
Feasibility
Sub criteria Evaluation
• Technological match • Does the funding option enable demonstration at the right
scale and of the desired technologies and products?
• Accommodation of multiple
technology requirements
• Does the funding option make it possible to accommodate
the different conversion technologies highlighted in this
group?
• Additional funding needed • How much additional funding needs to be raised, and from
which sources?
• Timeline • When will the grant realistically be awarded and what is the
length of the process?
• Additional partners (private
and public) needed
• Does the funding option require additional public or private
partners – and how much involvement is required from the
partners?
Timing
Overview of public funding sources
23
1. Main funding source for current biorefinery research projects. Percent counted as number of projects not percent of total funding.
Source: Star-Colibri “D2.3 - Preliminary report on the global mapping of research projects and industrial biorefinery initiatives”
Public
loans
EU funds
EU mandated,
member state
granted
Member state
funds
European
Investment
Bank
Risk Sharing
Finance Facility
(under EIB)
Funders Examples
Main funding for bio-
refinery related projects1
• NER300 grants
• FP7
• JTI
13%
• Structural funds, incl. Interreg 1%
• Art. 185 initiatives
• National research entities such as
FNR (Germany), Nordic Energy
Research, BOF (Belgium), BBSRC
(UK), etc.
86%
• Loans and loan guarantees None to date
• Funding for high risk research,
development and innovation
• Risk shared with EC through capital
cushion of € 2 billion
TBC
Focus of this
analysis
Grants
• The majority of
current funding
comes from
member states
• Loans from the
EIB have not yet
been available
(high risk profile),
even after RSFF
• This split of
funding sources
stresses the need
to include member
states in the
strategic
considerations for
funding options
Implications of national versus EU funding
24Source: Dalberg analysis
Member states
funding
Ideal consortia Implications
• Majority of consortia members
located in one country or a few
bordering countries
• Involvement from multiple local
stakeholders (e.g. farmers, local
universities, local governments,
national private sector, etc.)
• Example: Bio Base Europe
• Location needs to be within
country or at border
• Project focus need to be aligned
with:
• Local resources (feedstock
available and prominent local
industry)
• Local political priorities (e.g.
Energy targets, research
agenda, policies for regional
and industrial development
etc.)
• Members of consortia from
several EU countries
• Often including research
partners from countries
involved
• Example: SupraBio project
(launched under EC call for
sustainable biorefineries)
• Location less determined, but
regional development priorities
could play a role
• Project focus need to match
existing priorities and
mechanisms
• The EU does not support
research or demonstration of 1st
generation biorefinery
EU funding
Typical funding options
• Capex:
• National member states
funds
• Co-funding from regions/
municipalities
• Structural funds (e.g.
Interreg) as top up
• Opex:
• In kind from local
universities and
companies
• Potential to apply EU
research funds
• For example:
• NER300 grants
• FP7
• JTI
• Limited track record of
support to Capex for
demonstration activities
(EU mostly funds research)
• The EU is likely to have
less funds available in 2014
than 2013
Funding options
Establish
demonstration
scale ligno-
cellulosic bio-
refineries
producing
chemicals and
materials
Short term
(2011-13)
Long term
(2015-)
CPI, BE-Basic, BioBase
Europe, ARD, etc.
European Industrial
Bioenergy Initiative (EIBI)
Work with/build on existing facility
with potential support from FP7
call
Establish consortia to answer EIBI
call for demo facility
NER300 Establish consortia for next
NER300 call
Program/facility Options to use
PPP for demo bio-
refineries focused on
non-fuels
Help design new PPP instruments
Form coalition to apply in 2014
Article 185 Invoke national research support
to form partnership
ERA Net Plus Invoke national research
institutions to establish joint call
FP8 call for biorefineries
focused on non-fuels
Engage in FP8 dialogue to help
define early FP8 call for demo
biorefineries
Estimated
match
High
Low
Structural funds Invoke a member state to support a
biorefinery project
Primary
recommended options
Tailored European
Biorefinery Initiative (EBI)
Engage EC to include this
initiative under the European
Strategy for Bioeconomy
25
Medium term
(2013-15)
Timing of grant
Best alternative options
Description of short-term funding options
261. There might be an FP7 call to allow for targeted adjustments but not for building of new facilities
2. Typical size of grants allocated per project
Source: Dalberg analysis, EU
Program Description
Build on an
existing
facility
Join EIBI
(European
Industrial
Bioenergy
Initiative )
• Existing European facilities could host
demonstration activities
• In most cases this would require
expansion of facilities to match scale
and technical requirements
• Ongoing SET-plan initiative to promote
demonstration scale biorefineries to
convert lignocellulosic material to
bioenergy
• Has defined seven value chains with a
demonstration scale and flagship
initiative for each
• Could build on existing facilities
How to obtain support
• Not applicable
• Funding mandate but no
funds allocated yet
• Member states’ allocation
based on interest generated
by EOIs
• Public funding for up to 50%
of capex
• Expected size of grants2:
€10-20 million for demo
plants
• Establish private consortia, define project and
negotiate with existing facilities
• Apply to relevant FP7 call (if any)1. Alliance with
existing facility enables to apply to small calls
• Establish dialogue with EIBI to integrate this
groups ambitions and co-funding options
• Partner with biofuels companies and member
states for integrated biorefinery project
• Ensure member states’ support to proposed
project and consortia as soon as possible
• Apply to EIBI Expressions of Interest and Calls
Funds available
Primary
recommended options
Best alternative options
European Industrial Bioenergy Initiative (EIBI)
27
Note: Preliminary estimates of costs per single project per value chain. Including private and public
resources. It should be noted that because demonstration and flagship plants are by definition "first ever
built" the costs cannot be accurately estimated, until a basic design engineering study or a detailed
engineering study have been performed
Source: EIBI
BACK UP
Value chains included in EIBI program About EIBI
Funding
• Funding platform rallying and focusing
support, but with no funding pool
dedicated at this time
• Project funding will be 50-50 public-
private
• Most EIBI’s public funds will come
from member states
• Member states will decide the
amount of funding granted, based
on project descriptions (EOIs) and
national interests
• Most national funding will be linked
to specific projects
Technical focus:
• 70% of the output of the biorefineries
must be bioenergy
• This includes co-generation of
heat and power
• The remaining 30% can be
biochemicals, biomaterials and other
• Though EIBI is mostly focused in
biofuels, the bioindustry could work to
broaden its scope through private
funding and member states and EC’s
support
• Partner with member states, ETPs, industry and
other stakeholders to rally for a tailored European
Biorefinery Initiative (EBI)
• Inclusion of a tailored EBI under the European
Strategy for Bioeconomy
• Ensure member states’ support to proposed project
and consortia as soon as possible
• Apply to EBI Expressions of Interest and Calls
Description of medium-term funding options
28
Source: Dalberg analysis, EU
Program Description How to obtain supportFunds available
Apply to
structural
funds
• EU funds granted by member states or
regions
• Aimed at resolving structural economic
and social problems
• Interreg funds most likely funding option
• ~ € 350 billion total
• Average size of grants:
€ 200.000 (Interregio IV)
• Partner with public institutions to develop a
biorefinery project aligned with structural funds’
goals (convergence, competitiveness and
employment, territorial cooperation) and matching
an interregional cooperation
• Obtain member states’ support for the project
• Initiative to promote demonstration scale
biorefineries
• Establishment of funding platform
similar to EIBI
• Aligned with EU biobased economy (not
only focused in biofuels)
• Could build on existing facilities
• Initiative not defined yet
• Ideally, similar to EIBI
• Funds allocated by
member states based
on interest generated
by EOIs
• 50-50 split between
private and public
funding
Establish a
tailored
European
Biorefinery
Initiative
(EBI)
Primary
recommended options
Best alternative options
Description of long-term funding options (1/2)
29
Source: Dalberg analysis, EU
Program Description How to obtain supportFunds available
• PPP between EC and private partners
• During FP7, the EC established PPPs
through JTIs and other mechanisms
• New PPP structures are expected for
2014
• Funds not allocated until
the establishment of a PPP
• Funds pooled from FP8
and member state
contributions
• Help design new PPP program
• Establish a private sector consortia willing to
commit funds (historically, at least 50% in the case
of JTIs and other PPPs)
• Convince EC and ETP to establish biorefinery PPP
Establish a
Public
Private
Partnership
(PPP)
FP8• EU´s main mechanism to finance
research and innovation
• Limited support to demonstration to date
but strong push to increase this in FP8
• Funds not allocated yet • Form a private consortia and develop a common
position in the biorefinery field
• Communicate common position to member states
and EC through ETPs, Star-Colibri and individual
reach out to member states
Primary
recommended options
Best alternative options
Description of long-term funding options (2/2)
301. First round with a funding mandate of up to € 3 billion was closed for applications early 2011
Source: Dalberg analysis, EU
Program Description How to obtain supportFunds available
• Public sector entity used by EU to
implement national research
programmes jointly with member states
• Funding: from member states (at least
50%) and EC
• Funds not allocated until
the launch of a Dedicated
Implementation Structure
(DIS) under Art. 185
• Form alliance with member states willing to invest
human and financial resources on a common
research program and to apply for Art 185 to EC
• Public sector instrument only, no direct
private sector involvement
• EC mechanism to coordinate national
research programmes
• Funding: from member states (at least
67%) and EC
• Funds not allocated until
the launch of an Era Net
Plus
• Form alliance with at least 5 member states willing
to launch a transnational research call and to
negotiate with EC for financial support under the
EraNet Plus supporting scheme
Article 185
Era Net
Plus
Join
NER300
• Program based on Emission Trading
Scheme funds
• Supports commercial demonstration
projects of innovative renewable energy
production and CCS
• Up to € 1,5 billion available
in second round1
• Funding up to 50% of the
value of the project
• Size of grants not yet
known
• Develop demonstration scale biorefinery focused
on bioenergy
• Apply to second NER300 call likely to be launched
in 2013 or 2014
EBI (European Biorefinery
Initiative)
Core implications, pros and cons of the recommended options
31
EIBI PPP FP8
Main
implications
• Production focus: bioenergy
• Requires international consortia
• Urgency to create project
consortia, decide biorefinery
vision and location
• Requires all stakeholders to
pool funding and design in
committee
• Likely to require international
EU consortia
• Scope uncertain and
politically defined
• Likely to require international
EU consortia
• Likely, restricted access
Advantages • Only funding window opened
• EIBI’s biorefinery vision partially
aligned to bioindustry’s needs
(size, technologies)
• Urgency can foster dialogue
and speed up decision making
• Joining the initiative is likely a
better option than competing
for the same funding
• Industry-driven initiative and
best option to pool funding
• Could be shaped to match
scope tightly (e.g.
Biochemicals and biomaterials
production)
• Can result in good longer term
relation between industry and
public institutions with positive
spin-offs
• Allows for 2-3 competing
consortia
• No immediate geographical
dependency
• Could be shaped to match
scope tightly (e.g.
Biochemicals and
biomaterials production)
Challenges • 70% bioenergy output
• Need to partner with bioenergy
stakeholders
• Value chains predefined
• Some level of national/regional
confinement to obtain member
state support
• Uncertain bet as PPP facility
currently in flux
• Uncertain size of funding
• Long term option – unlikely to
see public funding before 2015
• Alignment on technical design,
location and governance might
be challenging in joint
consortia of diverging interests
and competitors
• Uncertain if the FP8 will
prioritize development and
make funding available for
Capex
• May turn out very research
focused
• Long term option – unlikely to
see public funding before
2015 in the most optimistic
scenario
• Getting several DGs to align
priorities and pool funding
involves greater political risk
• Requires support from both
member states, industry,
ETPs, and the EC
• Scope and outcome uncertain
• Tailored initiative would match
scope tightly
• Attractive timing: European
Strategy for Bioeconomy to
be decided over the next few
months
• Will compete with EIBI for EC
and member state funding
• Political will: member states’
support difficult to obtain
(especially given the
existence of EIBI already)
• Alignment on industry needs
will require consensus from
very different stakeholders
Evaluation of short-term funding options
32Source: Dalberg analysis
Program Fit
Build on an
existing
facility
• Fit:
• Allows for testing different conversion
technologies and products
• Maximizes value for money of
investments to test different
technologies and feedstock
• Fit:
• EIBI can accommodate different
conversion technologies and products
• Bioenergy needs to be 70% of output
measured on energy content (including
heat and power)
• Feasibility:
• Additional funding: funds needed to join
existing facility
• Additional partners: entity governing the
existing facility
• Feasibility:
• Additional funding: at least 50% from
private sector
• Additional partners: at least 3 member
states and 2 companies from different
EU countries
• Medium
• Medium/High
Feasibility Overall
Join EIBI
(European
Industrial
Bioenergy
Initiative )
Timing
• Short-term
• Fund raising 2011-
2012
• Short-term
• Negotiations can start
as soon as a private
consortium defines
demonstration project
High
Low
Primary
recommended options
Best alternative options
Evaluation of medium-term funding options
33Source: Dalberg analysis
Program Fit Feasibility OverallTiming
• Fit:
• A tailored EBI would have a perfect fit
with the bioindustry needs
• EBI could accommodate demonstration
scale projects for several technologies,
feedstock and outputs
• Feasibility
• Not defined yet
• Additional funding: partially funded by
private sector
• Additional partners: member states,
ETPs, industries, research institutions,
etc.
• Medium/High• Medium-term
• European Strategy
for Bioeconomy
currently under
discussion (closure
expected by end of
the year)
• Funds could be
allocated by end of
2013
Establish a
tailored
European
Biorefinery
Initiative
(EBI)
Apply to
structural
funds
• Fit:
• Allows for testing different conversion
technologies and products
• Timing varies according to national
priorities. Once national decision is taken,
funds are allocated under certified
expenditures
• Feasibility:
• Additional funding: generally co-financing
with own member state resources
• Additional partners: member state co-
financing the project and granting the
structural funds
• Medium• TBD
• Some funding
could still be
available within
Interreg IV
High
Low
Primary
recommended options
Best alternative options
Evaluation of long-term funding options (I)
34Note: timing estimated according to past examples, expert insights or Dalberg research
Source: Dalberg analysis
Program Fit Feasibility OverallTiming
FP8 • Fit:
• FP8 priorities not defined
• Biotech is high on the agenda
• There is a drive towards more
demonstration
• Feasibility:
• It will depend on FP8 definition
• Medium/High• Long-term
• FP8 starts in 2014
Establish a
Public
Private
Partnership
(PPP)
• Feasibility
• Additional funding: partially funded by
private sector
• Additional partners: likely EC and
member states
• Medium/High• Long-term
• Funds not available
before 2014/2015
• Fit:
• A PPP could accommodate
demonstration scale projects for several
technologies, feedstock and outputs
High
Low
Primary
recommended options
Best alternative options
Evaluation of long-term funding options (II)
35Note: timing estimated according to past examples, expert insights or Dalberg research
Source: Dalberg analysis
Program Fit Feasibility OverallTiming
Join
NER300
• Fit:
• NER300 cannot accommodate multiple
outputs in the short-term (100%
focused on the production of
bioenergy)
• Feasibility:
• Additional funding at least 50% from
private sector
• Additional partners: none
• Low• Long-term
• Funds expected by
2015/2016
Article 185
Era Net
Plus
• Fit:
• Focused on research programmes (no
support of demonstration)
• Feasibility:
• Additional funding: at least 50% from
member states
• Additional partners: member states
and EC
• Medium/Low
• Fit:
• Focused on research (no support of
demonstration)
• Funds allocated in the long-term
(expected later than 2014)
• Feasibility:
• Additional funding: at least 67% from
member states
• Additional partners: member states
and EC
• Medium/Low
• Long-term
• Funds expected
2014/2015
• Long-term
• Funds expected
2014/2015
High
Low
Primary
recommended options
Best alternative options
Additional funding options
36
Source: Dalberg research, interviews
• These funds could influence the biorefinery economics and feasibility but cannot contribute to
cover the capital investments required
Common
Agricultural
Policy (CAP)
Research
funds
• CAP will not support capex for biorefineries directly in any foreseeable future
• During next funding cycle (2014-2020), CAP could support the biorefinery value chain
upstream through:
• Funds to support building the infrastructure for collection and storage of agriculture
residues
• Subsidies to farmers to increase biomass production (though subsidy to change crops
to energy crops was recently terminated)
• CAP could have a high impact on feedstock economics and availability. However, its outlook
is still uncertain
• Funds fostering research will be available both under FP7 and FP8
• Some of these funds might cover research activities conducted in the demonstration
biorefinery
Funds Potential support
Agenda
37
1. Vision
2. Design and cost
3. Funding options
4. Location analysis
5. Governance models
6. Implications and implementation plan
Annex A: Back ups
Steps to define location of demonstration biorefinery
38
Decision 1:
• Build on
existing facility
and/or
• Build a new
facility
Decision 2 (if decided to
build a new facility)
• Funding mechanism
• Feedstock, technical
route, output
• What needs to be
tested
Decision 3:
Selection of attractive
clusters
(co-location synergies)
Decision 4:
Selection best 3-5
clusters, final candidates
to host the biorefinery
Specific
biorefinery
location
• Availability of time and
financial resources
• Project match with
existing facilities
• Open funding windows
• Member states’ support
• Consortia’s private
interests, state of the art
of the technology, key
areas to test
• Economic synergies
• Operability, access to
talent pool and expertise
• Feasibility to join the
cluster (regulation,
capacity, etc.)
• Existence of local feedstock
market close to cluster
• Degree of industrialization
of agriculture/forest
processing
• Crops/forest residues yields
• Access to transportation
network
Source: Dalberg analysis
Decision
Criteria:
Decision
outcome:• Decision to build a new
plant and/or to join an
existing facility
• Selection of country or
high-level region
• Selection of most
attractive clusters
within the selected
regions
• Selection of key clusters
offering the best co-
location synergies,
feedstock availability and
transportation costs
• The ideal agriculture-based biorefinery will be:
• Integrated into a relevant industrial cluster
• Next to an agricultural area with existing residues collection infrastructure
• Close to clients and biotech knowledge (e.g. industries active in the biobased area, research centers,
universities)
• The ideal forest-based biorefinery will be:
• Integrated next to a paper pulp mill or a facility producing forest-based feedstock
• Located in an area of dense forestry
• Close to clients and biotech knowledge (e.g. industries active in the biobased area, research centers,
universities)
• The application of these criteria shows a number of potential good hosting regions for the biorefinery
• The specific location will be a function of the funding strategy applied
• High-level region defined by type of funding, output and feedstock focus and member states involvement
• Specific location defined by co-location synergies, feedstock availability and transportation costs to end
users
• These criteria are unnecessary if the consortia decides to build on existing facilities to leverage knowledge
and minimize funding needs
Summary of principles for ideal location for a biorefinery (1/2)
Source: Interviews, Dalberg analysis39
• The location of the biorefinery should seek to optimize the plant’s economics and operations, in order to provide
the best simulation for larger-scale plants
• The importance of the location variables depends on the scale of the plant and the time horizon considered
• Early stage facilities are very sensitive to Capex due to difficulties in finding external funding and to unproved
revenue models. Commercial scale plants, however, are much more sensitive to operating costs
• External financial support and co-location synergies have a high impact on funding needed and are key
for demonstration scale facilities
• Feedstock costs are especially important for commercial scale facilities
• In the medium to long-term, different EU regions might improve their cluster landscape, funding schemes,
feedstock availability or transportation network. This would increase the number of potential good hosting
regions for the biorefinery
• In the short-term, some EU countries (e.g. France, Germany, Belgium, the Netherlands, Denmark, UK, Sweden
and Finland) are more attractive locations for a biorefinery (agriculture-based in the heart of Europe and UK,
wood-based in Scandinavia)
• In the long-term – and as full commercial scale biorefineries emerge - other regions could become attractive
locations for a biorefinery provided improvement in key location variables (e.g. Eastern Europe)
Summary of principles for ideal location for a biorefinery (2/2)
Source: Interviews, Dalberg analysis40
Feedstock cost, transportation costs, synergies from co-location and funding
and regulation are key factors for the location decision
41
1. Feedstock: lignocellulosic material. 2. Other operating costs: electricity, water, waste disposal, etc. 3. Other fixed costs: real estate leases,
maintenance, etc.
Note: these graphs are an approximation for illustrative purpose only. The exact breakdown will depend on the final value of the product
Source: National Renewable Energy Laboratory, Expert interviews, Dalberg analysis
0
20
40
60
Transportation and
logistics
5-10
Other fixed costs3
5-10
Capital costs
10-30
Other operating costs2
5-10
Enzymes, acids, and
other raw materials
10-35
Feedstock cost1
25-40
Main cost
drivers
Function of
geography
Function of
co-location
Function of
funding
options and
local
regulation
% of final product value
• Feedstock
availability in the
biorefinery
surroundings
• Cost of enzymes
and acids
• Cost of
energy/utilities/water
and other operating
costs
• Total Capex
• Plant capacity/
technological
scope
• Cost of labour/
construction
materials
• Plant capacity/
technological scope
• Real estate leases,
maintenance, etc.
• Proximity to end
users
• Accessibility to
transport
infrastructure
High importance
Low importance
Key variables for
location decision
The importance of these key factors varies for demonstration plants
42
Relative importance
• Higher importance for a demonstration plant due to significant Capex savings
• Additionally, positive impact on the plant´s operability through shared staff, access to
talent pool and expertise, etc.
Feedstock cost
Transportation cost
Synergies from co-
location
Funding and
regulation
• Lower importance for a demonstration plant given the limited feedstock required
• As a result, a demonstration facility will have bigger flexibility to feedstock availability than
a commercial plant (where this is the paramount variable)
• Lower importance for a demonstration scale plant, given the limited output sold in the
market
2
3
1
4
Key variables for
demo plant
Main location variables
Cost of feedstock
Cost of
transportation to end
users
Source: Dalberg analysis
3
4
• Feedstock costs are 25-40% of the COGS
• The key driver for feedstock cost is its availability in the biorefinery surroundings
• The availability of agriculture residues depends on crop production, yield and degree of development
of the infrastructure to collect residues
• In the case of forest residues, feedstock availability is a function of wood and wood residues
production
• Transportation costs to end users are 5-10% of the COGS
• Transportation costs are mostly driven by:
• Access to good transport infrastructure
• Distance from the biorefinery to customers (e.g. chemical, biotech, pharma and plastic industries)
43
Funding and
regulation
Synergies from co-
location
1
2
• Co-location generates synergies for the biorefinery by reducing Capex up to 90% and Opex up to 15%
• Synergies from co-location arise along the value chain:
• Upstream, through proximity to agriculture processing facilities and paper pulp mills
• Midstream, through integration into existing industrial complexes
• Downstream, through proximity to end users
• Funding and regulation and regulatory environment impact Capex and Opex through:
• Different EU priority regions
• Availability of local co-funding
• Local tax credits and waste water regimes
Focus for
this section
1. Co-location with existing facilities generates synergies along the value chain
44Source: Dalberg analysis
Upstream
Midstream
Downstream
Synergy description
• Surrounding cereal cooperatives supply more stable quantities of agriculture residues
• Proximity to cereal/sugar beet processing facilities provides cheaper feedstock because of low transportation costs
• Integration of forest-based biorefineries with paper pulp mills ensures feedstock availability and minimizes capex and
operational costs
• Proximity to end users (e.g. biofuel buyers) and other
companies using biorefinery output as a production factor
(e.g. chemical, pharma, plastic industries, etc.)
Feedstock
collection
Feedstock
reception and
pretreatments
Biomass
degradation
Biomass
treatment
Biomass
treatment
Output refining
Logistics:
Transportation
and distribution
to customers
• Availability of experienced staff and access to good talent pool in the
region
• Proximity to heat/power factories
• Allows the biorefinery to generate heat/energy through
combustion of waste products
• Obtains heat/energy from other plants in the industrial complex
(those with a positive energy balance )
• Proximity to certain factories (e.g. Sugar beet refineries) can provide
input for the biorefinery such as water, CO2 or sucrose
• Integration into an industrial complex can provide waste water and
other effluent treatment facilities
• Synergies from tailored in-the-field R&D
• Ensured plant’s operability
• Reduced energy costs (Opex)
• Savings in boilers, CHP plants, etc. (Capex)
• Reduced operational costs
• Savings in Capex
• Savings in waste water treatment facilities
(Capex)
• More effective research and reduced labor costs
(Opex)
• Minimized transportation costs of biorefinery
output
1. Several countries offer good co-location possibilities for agriculture-based
biorefineries
45
1. Data for 2009. Size measured in number of employees, according to European Cluster Observatory (ECO) methodology
2. According to the Star Ratings of the European Cluster Observatory. Data for 2009. Calculated as the average of biotech, plastic, pharma and
chemical clusters ratings
Source: Eurostat, Biorefinery, European Cluster Observatory (ECO)
Rating of existing clusters2
(biotech, chemical, pharma and plastics)
1,01,0
0,9 0,9 0,9 0,9
0,5
1,5
AusFraHunPolBelIta
1,0
Ger Den Ire
0,0
1,0
1,3
1,0
Star rating by European Cluster Observatory
European innovation clusters1
(number of employees)
• The exact co-location decision will need to consider synergies arising from each cluster, however Northern Europe seems
to present a stronger starting point with well established clusters of the relevant industries
Source: Biorefinery Euroview-Biopol, Dalberg analysis 46
• Integration with paper pulp mills provides
feedstock supply (black liquor) to biorefineries
• Integration (through additional modules to a paper
pulp mill facility) reduces Capex substantially
•Examples estimate the cost of adding biorefinery
facilities to an existing pulp and paper plant to be
only 25% of the capex required to build a new
plant of same capacity
Paper pulp production in Europe, 2007
1. The paper pulp industry in Scandinavia has the biggest co-location potential
for forest-based biorefineries
Co-location synergies for
forest-based biorefineries
High paper pulp
production areas
1. There are examples of co-location in the agriculture and forest-based
biorefining
47
Bazancourt-Pomacle Biorefinery
(France)
Cluster
Upstream
synergies
Midstream
synergies
Downstream
synergies
Range estimates
savings
• Feedstock supply (wheat
and glucose) from wheat
silos and wheat
biorefinery
• Energy and steam
provided by cogeneration
facilities
• Water supplied by sugar
beet biorefinery
• Minimum transportation
costs to end users
(BioDemo - biotechnology
industrial plant in the
cluster)
• Unknown
Dong Inbicon Biomass Refinery
(Denmark)• Wheat straw collection
infrastructure available
from co-location with heat
and power generation
• Shared generation with
heat and power facility
• TBD • Unknown
Processum (Sweden)
• Black liquor supply from
integration to paper pulp
mill
• Energy, steam provided
by cluster facilities
• Minimum transportation
costs to end users
• (companies producing
ethanol and ethanol
derivatives present in the
cluster)
• Unknown
Source: ARD and Processum documentation, Dalberg analysis,
Main location variables
Source: Dalberg analysis 48
Cost of feedstock
Cost of
transportation to end
users
3
4
• Feedstock costs are 25-40% of the COGS
• The key driver for feedstock cost is its availability in the biorefinery surroundings
• The availability of agriculture residues depends on crop production, yield and degree of development
of the infrastructure to collect residues
• In the case of forest residues, feedstock availability is a function of wood and wood residues
production
• Transportation costs to end users are 5-10% of the COGS
• Transportation costs are mostly driven by:
• Access to good transport infrastructure
• Distance from the biorefinery to customers (e.g. chemical, biotech, pharma and plastic industries)
Funding and
regulation
Synergies from co-
location
1
2
• Co-location generates synergies for the biorefinery by reducing Capex up to 90% and Opex up to 15%
• Synergies from co-location arise along the value chain:
• Upstream, through proximity to agriculture processing facilities and paper pulp mills
• Midstream, through integration into existing industrial complexes
• Downstream, through proximity to end users
• Funding and regulation and regulatory environment impact Capex and Opex through:
• Different EU priority regions
• Availability of local co-funding
• Local tax credits and waste water regimes
Focus for
this section
2. The country decision is key for the economics of the biorefinery
49
Source: Star Colibri, Dalberg research
• External financial support is key for the economic
sustainability of the biorefinery
• Most EU biorefinery related projects are funded by
member states through national funds
• EU biorefinery landscape is very diverse given the
different national supporting schemes
• Scandinavia, Benelux, France and Germany
are leading this industry in terms of number of
biorefinery related projects
• Despite greater availability of EU structural
funds, Eastern Europe is still lagging behind
• Nations with strong biorefinery activity offer
advantages beyond financial support (upstream,
midstream and downstream synergies)
5
11
34
40
49
59
72
92
Ger SweNet UK Pol HunFraFin
#
Biorefinery related projects per country
Main location variables
Source: Dalberg analysis 50
Cost of feedstock
Cost of
transportation to end
users
3
4
• Feedstock costs are 25-40% of the COGS
• The key driver for feedstock cost is its availability in the biorefinery surroundings
• The availability of agriculture residues depends on crop production, yield and degree of development
of the infrastructure to collect residues
• In the case of forest residues, feedstock availability is a function of wood and wood residues
production
• Transportation costs to end users are 5-10% of the COGS
• Transportation costs are mostly driven by:
• Access to good transport infrastructure
• Distance from the biorefinery to customers (e.g. chemical, biotech, pharma and plastic industries)
Funding and
regulation
Synergies from co-
location
1
2
• Co-location generates synergies for the biorefinery by reducing Capex up to 90% and Opex up to 15%
• Synergies from co-location arise along the value chain:
• Upstream, through proximity to agriculture processing facilities and paper pulp mills
• Midstream, through integration into existing industrial complexes
• Downstream, through proximity to end users
• Funding and regulation and regulatory environment impact Capex and Opex through:
• Different EU priority regions
• Availability of local co-funding
• Local tax credits and waste water regimes
Focus for
this section
• Given the high transportation costs, the availability of feedstock in biorefinery surroundings is key
• However, a demonstration scale facility is much more flexible with regards to feedstock availability than a
commercial one (given the different feedstock needs)
• Feedstock availability depends on the existence of feedstock markets in the region
• Feedstock markets tend to be relatively local as it is rarely viable to transport feedstock like agricultural
residue more than 100 km
• The price for agricultural residues is lower in unorganized markets but the infrastructure cost is likely to
be higher
• Currently, only some countries have an organized market for these residues (e.g. Denmark straw market,
result of utilities obligation to produce a share of their energy from straw)
• However, the market for agricultural residues is likely to become more commoditized and transparent in the
near term, given the increasing demand from biorefinery-related projects
• As many European member states do not currently have an organized market, the best proxies to measure
feedstock availability are the regional crop production and yields
3. Feedstock availability
Source: Interviews, Dalberg analysis51
Wheat production by regions Corn production by regions Cereal production yields
3. Several regions have high cereal and sugar beet production
Note: Data for 2007 distributed according to NUTS 2 classification (territorial units for statistics at the EU level). “Cereal“ as defined by
Eurostat (wheat, corn, barley and other cereals). Average yields per year from 2005 – 2010
Source: Expert interviews, Eurostat, Dalberg analysis
• Regions with high production and high yields offer a better feedstock availability and minimize supply costs
• Feedstock costs will be relevant for the biorefinery in order to provide the best simulation possible of these costs at a commercial
scale
T/ha
0
1
2
3
4
5
6
7
8
9
10
5,7
LuxIre
7,2
Net
8,3
Bel
9,6
Den
6,0
Aus
6,1
Ger
6,7
Fra
7,0
UK
7,1
52
3. The wood industry is concentrated in Northern Europe
1.Wood residues: miscellaneous wood residues, those which have not been reduced to small pieces. They consist principally of industrial residues
2.Wood: Wood in the rough, in its natural state as felled, or otherwise harvested, with or without bark, round, split, roughly squared or other forms (e.g.
roots, stumps, burls, etc.). All wood obtained from removals
Source: FAOStat, UNECE, METLA, Dalberg analysis
Wood residues1 production
(mostly industrial, yearly average 05-09)
m m3 per year
0
5
10
15
UK
1,6
Est
1,8
Ger
2,8
Lat
3,0
Spa
3,3
Aus
4,9
Fra
5,6
Fin
8,3
Swe
15,0
Wood2 production (yearly average 05-09)
0
10
20
30
40
50
60
70
80
Rom
14,0
Spa
15,4
Cze
16,8
Aus
19,1
75,4
Fra Pol
53,4
33,8
Ger Fin
61,6
50,4
Swe
m m3 per year
• The wood industry is highly concentrated in Sweden, Finland, Germany and France
• The production of wood residues could potentially be doubled but there is no current financially viable infrastructure for the
collection of fellings, roots, branches etc. from the forestry sites
53
Main location variables
Source: Dalberg analysis
54
Cost of feedstock
Cost of
transportation to end
users
3
4
• Feedstock costs are 25-40% of the COGS
• The key driver for feedstock cost is its availability in the biorefinery surroundings
• The availability of agriculture residues depends on crop production, yield and degree of development
of the infrastructure to collect residues
• In the case of forest residues, feedstock availability is a function of wood and wood residues
production
• Transportation costs to end users are 5-10% of the COGS
• Transportation costs are mostly driven by:
• Access to good transport infrastructure
• Distance from the biorefinery to customers (e.g. chemical, biotech, pharma and plastic industries)
Funding and
regulation
Synergies from co-
location
1
2
• Co-location generates synergies for the biorefinery by reducing Capex up to 90% and Opex up to 15%
• Synergies from co-location arise along the value chain:
• Upstream, through proximity to agriculture processing facilities and paper pulp mills
• Midstream, through integration into existing industrial complexes
• Downstream, through proximity to end users
• Funding and regulation and regulatory environment impact Capex and Opex through:
• Different EU priority regions
• Availability of local co-funding
• Local tax credits and waste water regimes
Focus for
this section
4. Transportation costs are minimized through good infrastructure and
proximity to customers
55
1. Accessibility (as defined by ESPON): combines level of economic activity in a certain region with the effort, time, distance and cost needed to
reach that area
2. Data for 2007. Includes revenues generated by the manufacturing of chemicals, rubber and plastics industries
Source: ESPON Project 1.2.1, European Monitoring Center on Change, Eurostat, Dalberg analysis
Accessibility1 to transportation infrastructure
Concentration of potential end users
(Revenues of chemical, rubber and plastic industry2)
1515
3340
5056
79
92
126
178
0
20
40
60
80
100
120
140
160
180
SwePolIreBelSpaNetItaUKFraGer
Billion €High potential
• The cost of transportation to customers depends on distance and cost/quality of transport infrastructure
• Benelux, northern France, Germany and southern England have the best access to transport infrastructure
• Potential customers in the chemical, rubber and plastic industries are mostly concentrated in Germany, France and the UK
EU-27 country overview – location variables
1. Average national production 2005-2010
2. Wood: Wood in the rough, in its natural state as felled, or otherwise harvested, with or without bark, round, split, roughly squared or other forms (e.g.
roots, stumps, burls, etc.). All wood obtained from removals
3. According to Star Ratings of European Cluster Observatory (2009). Average ratings for EU biotech, plastic, pharma and chemicals industry. Shows
cluster’s specialized critical mass to develop positive spill-overs and linkages (based on three main criteria: cluster size, specialization and focus)
4. Based on number of biorefinery related projects, according to Star Colibri database. Includes private, public and EU funded projects
Highest values
Medium value
Lowest values
56
Co-location
synergies Funding options
Transportation costs to
end users
Proxy variable
Rating
of existing clusters3 Biorefinery landscape4
Cereal production yields
(t/ha)1
Wood production
(Million m3)2Chemical industry
revenues (Bn €)
Austria 0.9 Medium 6.1 19.1 10.1
Belgium 1.0 High 9.6 4.8 39.5
Bulgaria 0.5 Low 4.1 5.6 1.3
Cyprus 0.0 Low 1.2 0.0 0.2
Czech Republic 0.4 Low 4.8 16.8 6.5
Denmark 1.0 High 6.0 2.7 9.5
Estonia 0.0 Low 2.7 5.0 0.4
Finland 0.2 High 3.4 50.4 7.5
France 0.9 High 7.0 53.4 126.0
Germany 1.3 High 6.7 61.6 177.6
Greece 0.4 Medium 3.7 1.5 3.5
Hungary 0.9 Medium 4.9 5.6 6.4
Ireland 1.0 Low 7.2 2.5 33.3
Italy 1.0 Medium 4.9 8.3 79.2
Latvia 0.3 Low 2.8 11.4 0.2
Lithuania 0.0 Low 2.9 5.8 1.5
Luxembourg 0.0 Low 5.7 0.3 0.2
Malta 0.0 Low 0.0 0.0 0.0
Netherlands 0.5 High 8.3 1.1 56.0
Poland 0.9 Medium 3.2 33.8 15.3
Portugal 0.1 Medium 2.8 10.4 5.4
Romania 0.8 Low 2.9 14.0 3.4
Slovakia 0.7 Low 4.2 8.7 2.1
Slovenia 0.8 Low 5.5 2.9 2.9
Spain 0.8 High 3.0 15.4 50.4
Sweden 0.5 High 4.8 75.4 15.3
United Kingdom 0.5 High 7.1 8.6 92.0
Cost of feedstock
Key variables for
demo plant
Potential locations for a demonstration scale plant in the short-term
57
Source: Dalberg analysis
The most efficient EU areas in
industrial farmingBiorefining in EU’s top priority area
Region
Wood biorefining in Scandinavian
forests
Feedstock cost• Score:
• Intensive industrial farming
• High cereal production and yields
• Score:
• Extensive agricultural area
• Low cereal yields
• Score
• High feedstock availability (black liquor)
from integration with pulp mills
• France, Germany, Belgium, the
Netherlands, Denmark, UK• Bulgaria, Hungary, Poland, Romania,
Slovakia, Czech Republic
• Sweden, Finland, Norway
Transportation
cost
• Score:
• Proximity to customers
• Excellent access to transport network
• Score:
• Medium distance to customers
• Good access to transport network
• Score:
• Proximity to customers
• Good access to transport network
Overall potential• High fit region for agriculture
residues demonstration biorefinery
• High synergy possibilities and likely
national support
• High fit region for forest residues
demonstration biorefinery
• High synergy possibilities and likely
national support
• Low fit region for biorefinery
• Likely EU support and lower Capex and
Opex
• Limited synergy and national support
Favourable
conditions
Unfavourable
conditions
Synergies from
co-location
• Score:
• High potential synergies across value
chain (agriculture processing facilities,
bioclusters, customers)
• Good access to biorefinery expertise
and talent pool
• Score:
• Some synergies with agriculture facilities
• Limited synergies – bioclusters
• Limited access to biorefinery expertise
• Score:
• High potential synergies across value
chain (pulp mills, bioclusters, customers)
• Good access to biorefinery expertise
and talent pool
Funding and
regulation• Score:
• Limited EU support
• High national support
• Dense biorefinery landscape
• Score:
• High EU support
• Limited national support
• Few ongoing projects
• Score:
• Limited EU support
• High national/regional support
• Dense biorefinery landscape
In the long-term, other regions could become attractive (e.g. Eastern Europe), as particularly feed stock
availability develops. This will be of higher importance for a full scale commercial biorefinery.
Agenda
58
1. Vision
2. Design and cost
3. Funding options
4. Location analysis
5. Governance models
6. Implications and implementation plan
Annex A: Back ups
Examples of governance models for European pilot biorefineries
59Source:
CPI Bio Base Europe BE Basic
Ownership • Private company, owned by the two
executive directors
• PPP between Ghent Bio-Energy
Valley and Bio Park Terneuzen
• PPP between universities,
research institutes and 24
companies
Key stakeholders • British Government
• Industry players
• Ghent Bio Energy Valley, Bio Park
Terneuzen, Dutch and Belgian
Governments
• Delft University, Research
institutions, DSM, Purac, other
Capex funding
source
• ~100% public (British Government) • 100% public (Interregio IV, Dutch
national and regional governments,
Flanders government)
• 30% public (Dutch national and
regional funds)
• 70% private
Opex funding
model
• Mostly fees from research and
innovation projects renting the facility
• Public grants
• Fees from research and innovation
projects renting the facility
• ...
Access • Open access. IP property of entities
renting the facility
• Open access. IP property of entities
renting the facility
• Open access
• Preferential access to partners
Facilities • Integrated modular biorefinery pilot
and demonstration plants (1000 and
10.000 litre capacity)
• Integrated modular biorefinery pilot
plant (10 tons biomass/day)
• Integrated modular biorefinery pilot
plant
Role/
contribution of
private partners
• Mainly customers of facility
• Advisory role contributing expertise
and customer flow
• TBC • Private funding
• In kind contribution (skills, staff,
etc.)
Governance
bodies/model• Management team
• Advisory board
• Management team
• Advisory board
• TBC
Agenda
60
1. Vision
2. Design and cost
3. Funding options
4. Location analysis
5. Governance models
6. Implications and implementation plan
Annex A: Back ups
Summary – implications and implementation
• The recommendation is to focus on joining the EIBI initiative for the near future, work towards a tailored bioindustry
initiative in the medium-term and potentially consider FP8/PPP funding in the long-term
• EIBI projects are likely to start construction in late 2013, while it is more likely to be 2016 for FP8 and PPP
• Expansion of an existing facility could further shorten the EIBI timeline
• A tailored bioindustry European Biorefinery Initiative (EBI) might be established within two years
• Initiative support from the EC and recognition under the European Strategy for Bioeconomy is key
• This will require collaboration between different industry players, ETPs, RTOs, member states and other
stakeholders, as well as fast alignment and decision making processes
• The setup and timelines for FP8 and PPP are uncertain.
• The project structure and responsibilities will be different between the FP8/EIBI and the PPP setup
• The PPP will require joint project governance and technical design decisions among all stakeholders
• The EIBI and FP8 will require joint industry coalition to promote the prioritization of non-fuel biorefineries but
will enable several project consortia to test competing technologies
• All funding mechanisms require at least 50% private sector co-funding, which would require a private sector co-
investment of up to € 125 million depending on scope and ambition
61
Who defines
technology
Governance of
demo biorefinery
Funding split
Access to demo
facilities
Partners needed
Public funding
source
Key location
driver
Who initiates the
program
Summary of implications of different funding options – key differences
62
EIBI PPP
• Overall – EIBI
• Detailed – private consortia
• PPP consortium • Overall – EU
• Detailed – private consortia
• Private • Public-private governance • Private governance, but
likely to require some public
access
• Max 50% public
• Min 50% private consortia
• Max 50% public
• Min 50% private consortia
• TBD
• To be decided by consortia
• Could accommodate open facility
if consortia agrees
• PPP consortia
• Could accommodate open
facility if consortia agrees
• Private consortia, unlikely to
be open facilities
• Biofuel producers • Likely to require public
research institutions
• Likely to need to represent
multiple member states
FP8
• EIBI group – EC, member states,
research and industry
stakeholders
• Industry • The Commission
• Member states, supporting
projects with the biggest national
interest
• EU may contribute top up funding
through ERA Net Plus
• EU • EU
• Choice to build on existing
facilities
• Member state support
• Optimal conditions to minimize
cost (see location analysis)
• Potentially EU priority regions
• TBD
• Potentially EU priority regions
• Overall – the initiative
coalition of ETPs, member
states and industry
• Detailed – private consortia
• TBD
• Likely to be 50-50 public-
private
• TBD
• Member states willing to co-
fund
Tailored initiative (EBI)
• Industry, ETP, RTOs, other
stakeholders
• Mainly member states
• Potential for some limited
EU funding
• TBD
• Choice to build on existing
facilities
• Member state support
Joint
ownership
Sub-
consortiaTailored
EBI
Medium term
action
Next steps decision tree
63
Short term
action
Join EIBI
Sub-
consortia
EIBI or not
Joint or
collaborative
Joint
ownership
Sub-
consortia
Joint
ownership
New
Existing
Build on existing
or create new
Define detailed
project
Who to partner
with
Attempt
national
alternative
Short-term
action or not
Next
step
Yes
No
Sub-
consortia
New
Existing
New
Existing
New
ExistingNot mutually
exclusive
• Define in
consortia:
• Detailed design
• Location
• Budget
• Governance
mechanism
• Identify additional
private and public
partners needed if
any
Define long
term modality Joint
ownership
New
Existing
New
Existing
FP8
PPP
Approval of the strategy – key decisions and implications
ImplicationKey decision
• Preparation of decision will require an urgent dialogue
with EIBI to prepare groundwork
• Positive EIBI decision commits the industry to
aggressive time-scale, requiring implicit agreement by
companies on competitive coalition approach
• The decision to go for an own program (EBI) also
requires immediate action and strong collaboration with
ETPs and other stakeholders
• Use of the EIBI
window or set up own
initiative: EBI
• A collaborative approach will require
• Coalitions between companies to drive design and
provide application assistance
• EuropaBio as trusted broker and liaison with EU
• Competitive or
collaborative
approach
• A competitive approach will require
• ETPs and industry to coordinate technical design
process and drive proposal submission
• Companies to work in committee towards
consensus designs 64
Key parameter
• Is your desired project feasible within
the technical parameters?
• Do you believe it will be easier to
collaborate than compete for funding?
• Is it attractive to pool investments with
this group?
• Do you believe that you can align on a
feasible and satisfactory technical
design and scope by collaboration?
• Short term action requires high decision pace• Short term action • Is it urgent to start demonstration
activities to compete globally?
• Are you ready – financially and
technically – to invest in a
demonstration facility?
Approval of the strategy – key decisions and implications
ImplicationKey decision
• Building on current facilities allows for more
modest or gradual investments, building on
existing expertise and getting started faster
• It does not allow for direct ownership and most
likely not for the 100% optimal design
• Build on existing or
new
• Strategic partnerships can ensure sound
economics, steady supply of biomass and
expertise but too many stakeholders may
challenge the decision power of the consortia
• Who to partner with
65
• FP8 aligns with a competitive approach, whereas
PPP follows a collaborative approach, with
significant implications for roles & responsibilities
• Long-term funding
modality
Key parameter
• Are there facilities that could
suitably be adjusted to match
your demo project?
• How much are you willing/able
to invest to get a new facility?
• Do you want to own the facility
longer term?
• Do you need more private
partners to contribute;
• Funding
• Knowledge
• Resources
• Fill the facility etc.
• Long-term funding modality
Roles & responsibilities – trade organization (e.g. EuropaBio) and RTOs
DescriptionResponsibility
• Tracking of development opportunities of other bioeconomy
based initiatives
• Liaising with other biorefinery
initiatives
• Support to prepare submissions (standard requirements,
non-technical components)
• Application assistance
• Exchange of non-sensitive information between coalitions /
companies• Trusted broker between /
within coalitions
• Support and coordination of outreach to EU institutions and
member states• Coordination of funding
windows
• Facilitation of meetings and consensus building across
companies on technical design, financial design and
location
• Facilitation of design
66
Role
• Competitive
universe (EIBI, FP8)
• Collaborative
universe (PPP)
• Overall
• Support to prepare submissions (standard requirements,
non-technical components)
• Support in creation of
coalitions
• Develop and submit the joint proposal• Submission of proposal
Roles & responsibilities – industry
DescriptionResponsibility
• Articulation of the business case and fund-raising with
national stakeholders
• Advocacy and fund-raising
• Preparation and submission of the proposals (together
with partners and support from bioindustry coordinator)
• Proposal development and
submission
• Development and advocacy of the business case for
corporate co-investment• Preparation of corporate
business case
• Participation of company experts in collaborative design
process (technical, financial, location)
• Engagement in consensus-building activities, and build
willingness to accept compromises
• Engage in joint design
process
67
Role
• Competitive
universe (EIBI, FP8)
• Collaborative
universe (PPP)
• Overall
• Partnering with companies that are closely aligned on
technical design / location / operating model
• Creation of coalitions
Roles & responsibilities – European Technology Platforms (ETPs)
DescriptionResponsibility
• Dialogue with EC about research policies and priorities• Advocacy to stakeholders
and EC
• Structure dialogue among industry players and RTOs,
reach consensus on common vision and define roadmap
(strategic research agendas) , e.g. StarColibri, IEA
Bioenergy Task 42
• Define research and
technological objectives for a
biobased economy
• Networking fora to connect companies with aligned or
complementary interests
• Preparation and submission of the proposals (together
with partners and support from bioindustry coordinator)
• Support in creation of
coalition
• Proposal development and
submission
68
Role
• Competitive
universe (EIBI, FP8,
new EBI)
• Collaborative
universe (PPP)
• Overall
• Coordination of funding windows • Support EC’s calls launch process
• Compilation of industry’s needs and arguments
• Structure these needs around a Strategic Research Agenda
• Support EC in defining future funding mechanisms (EIBI,
FP8, etc.)
• Support EC in the actual fund allocations (calls)
• Coordination and
communication of industry
needs
Timeline – Strategy approval
2011
Mar Apr May
Communication of strategy
Definition of roles & responsibilities of key stakeholders
Mapping of financial implications / budgets
Finalization of timelines
Discussion of strategy with key stakeholders
Refinement / changes to strategy document
Location TBD
Implementation
Approval of implementation plan
Activity
Approval of strategy
69
Agenda
70
1. Vision
2. Design and cost
3. Funding options
4. Location analysis
5. Governance models
6. Implications and implementation plan
Annex A: Back ups
Technical survey - size and technology
71
0
2
7
I am indifferentMixed facility
including thermo-
chemical route
Sugar-based
(biological route)
The conversion route you are primarily interested in
testing (Number of responses)
1
1
2
2
2
4
4
9
2
Waste water treatment
Chemical conversion (catalytic)
Pyrolysis
Anaerobic fermentation
Combustion
Biological Acidic
Gasification
Steam explosion
Biological Enzymatic
Essential technologies to test (Number of responses)
BACK UP
BASED ON 9 RESPONSES
3
Not essential,
But if possible
No
No
6
4
2
Yes
Essential to test both thermochemical and biological in
same plant (Number of responses)
0
22
5
0
>1001005010>10
Size – tons of dry biomass per day (Number of
responses)
Source: Technical survey among expert group participants
• Comment: Depends on what needs to be tested.
Gasification will require high volume while other
technologies can be tested at smaller scale
Technical survey - biomass
72
3
0
44
Whole cropEnergy
crops
Forest
resources
Agricultural
residue
Primary biomass in demonstration plant
(Number of responses)
1
3
4
5
6
1
3
Food/oils
Algae
Municipal waste
First generation sugar crops
Agricultural residue
Energy crops
Forest resources
Additional feedstock to test (Number of responses)
BACK UP
BASED ON 9 RESPONSES
1
8
NoYes
Essential to test several feedstock in same plant
(Number of responses)
Source: Technical survey among expert group participants
European Industrial Bioenergy Initiative (EIBI)
731. Measured as energy content (including heat and power) over total plant’s output
Source: EIBI, Interviews
About EIBI
EIBI focus areas
Governance model
Funding model
• Public-private initiative to promote and fund the establishment
of up to 14 lignocellulosic demonstration and flagship plants
• EIBI will support projects focused on bioenergy (at least 70% of
output) 1
• Established on the basis of the SET plan and the EU biofuels
technology platform
Thermochemical pathways
1. Synthetic liquid fuels and/or hydrocarbons (e.g. gasoline,
naphtha, kerosene or diesel fuel) and blending components
through gasification
2. Biomethane and other biosynthetic gaseous fuels through
gasification
3. High efficiency heat & power generation through
thermochemical conversion
4. Intermediate bioenergy carriers through techniques such as
pyrolysis and torrefaction
Biochemical pathways
5. Ethanol and higher alcohols from lignocellulosic feedstock
through chemical and biological processes
6. Hydrocarbons (e.g. diesel and jet fuel) through biological
and/or chemical synthesis from biomass containing
carbohydrates
7. Bioenergy carriers produced by micro-organisms (algae,
bacteria) from CO2 and sunlight
• EIBI team under the SET plan committee governing the EIBI
initiative
• The EIBI team has representatives of the European Commission,
16 member states and industry representatives. Membership is
based on interest, not contribution
• Projects awarded based on open calls. Criteria set but evaluation
process not yet defined
• EIBI estimates total Capex for the 14 projects to be ~€ 2.6 billion
• There are no funds allocated to these projects at present
• Project funding will be 50-50 public-private
• Most EIBI’s public funds will come from member states
• Member states will decide the amount of funding granted,
based on project descriptions (EOIs) and national interests
• Most national funding will be linked to specific projects
• EC might provide minor funds to incentivize cooperation across
member states (under ERA Net Plus, still to be confirmed by EC)
• Private funding will cover (at least) 50% of the Capex of the
project
Seventh Framework Programme (FP7)
74
Source: Dalberg analysis, EU
About FP7
FP7 focus areas
Fund allocation process
FP7 calls
• Seventh Framework Programme for Research and
Technological Development
• EU’s main instrument for funding Research in Europe
• €50 billion budget for research-related projects over 7 years
(2007-2013)
• FP7 will be replaced by FP8 in 2014-2020. FP8’s budget has
not been allocated yet
The FP7 covers 4 specific programs
1. Cooperation (€32.3 billion budget): supports international
cooperation projects across the European Union and beyond
2. Capacities (€4.2 billion budget): supports regional research
driven clusters
3. Ideas (€7.5 billion budget): supports activities implemented by
the European Research Council
4. People (€4.7 billion budget): supports research careers of
individuals
The strongest links between FP7 and the integrated 2G
biorefinery are Cooperation (through projects in agriculture,
biotechnology, energy and environment areas) and Capacities
(through research infrastructure areas)
• FP7 priorities are defined at the beginning of the program by the
EC in consultation with member states
• These priorities are adjusted periodically and guide the fund
allocation
• Funds are allocated to research projects, mostly through open
calls for proposals
• Calls are not public in advance. The EC defines and launches
new calls several times per year
• Funds allocated to each call depend on type of projects funded
and available budgets
• When defining new calls, the EC consults member states,
industrial associations and other interest groups
• FP7 calls can support up to 30% of demonstration projects and
up to 50% of research projects
• Funds for each call vary depending on the nature of the project
• Calls generally have intense competition. Strong research
consortia with a balanced EU geographical presence have a
competitive advantage
EU Framework Programmes (FP)
75
Source: Dalberg analysis, EU
Milestone Timing Entities involved
Call definition • Several times per year
during FP7
• Call definition generally
takes place 6-9 months prior
to the launch of the call
• Negotiation: European Commission, member
states
• Approval: European Commission
Call launch
• 1-2 years before the
program starts
• European Commission
FP7 calls
schedule
Programme definition
(structure, priorities and
fund allocation decision)
• Negotiation: European Commission,
European Council, member states, private
sector, interest groups and other
stakeholders
Programme approval • 1st January 2014 • European Council
FP8
• Several times per year
during FP7
Joint Technology Initiatives (JTI)
76
Source: Dalberg analysis, EU
About JTI
Existing JTIs
Fund allocation process
• Joint Technology Initiatives are public private partnerships
between the EC, member states and the private sector based
on article 171 of the Treaty
• JTIs foster large scale multinational innovation. They can
support research, technological development and
demonstration programs over a period of 10 years
• JTIs arise from European Technology Platforms’ (ETPs)
recommendations
• ETPs are industry-led stakeholder fora defining research
priorities
• JTIs do not have a budget allocated a priori
Five JTIs have arisen as a result of ETPs’ initiative
1. The Innovative Medicines Initiative (IMI): €2 billion budget
2. The Embedded Computing Systems Initiative (ARTEMIS):
€2.7 billion budget
3. The „Clean Sky‟ Initiative: €1.6 billion budget
4. The Nanoelectronics Initiative (ENIAC): €3 billion budget
5. The Fuel Cells and Hydrogen Initiative (FCH): €1 billion
budget
• Each JTI is funded by industry (at least 50%) and by member
states and the European Commission. The EIB and structural
funds can contribute to the funding as well
• JTIs priorities are defined by each of JTI’s parties
• Funds are then allocated to projects mostly through open calls
for proposals
• Funds allocated to each call vary according to the projects
• JTIs have been heavily criticized because of their lack of
flexibility and excess bureaucracy
NER300 - fund description
77
Source: NER300
About NER300
NER300 focus areas
Fund allocation
• Fund that supports commercial demonstration projects of
innovative renewable energy or CCS
• EC, EIB and member states jointly manage NER300
• NER300 funds arise from the sale of 300 million allowances
(right to emit one tone of CO2). Funds available depend on CO2
market prices
The NER300 is structured around Carbon Capture and Storage
(CCS) and Innovative renewable energy technology
The Renewable Energy Technology category includes:
1. Bioenergy: lignocellulose, household waste or algae to
electricity or biofuels
2. Concentrated solar power
3. Photovoltaics
4. Geothermal
5. Wind
6. Ocean
7. Hydropower
8. Smartgrids
• NER300 allocates its funds through two open calls
• First call just closed: 200 million allowances (expected €2
billion)
• Second call: to be launched in 2013, 100 million allowances
(expected €1.5 billion)
• First call – fund allocation process
• Project submission to member states by February 2011
• Member states review and submission of eligible projects to
EIB (~June 2011)
• EIB evaluation, ranking and listing of recommended projects
(~March 2012)
• European Commission award decision (~Second half 2012)
• Rules of the fund allocation
• The funds will cover up to 50% of the project’s relevant costs
(extra Capex and Opex needed to demonstrate the technology)
• Individual project financing is limited to 15% of total NER300
funding (45 million allowances)
• Funds are disbursed annually as a function of the carbon stored
or the renewable energy generated. In some cases, upfront
payments are allowed as well
• NER300 project requirements
• Projects need to be financially robust and provide detailed
information on costs and revenues
• Projects have a sharing-knowledge obligation. The EC has not
fully defined this obligation for renewable energy projects
NER300 - support to bioenergy
78
Source: NER300
Renewable energy technology
• Lignocellulose to intermediate solid, liquid or slurry bioenergy carriers via pyrolysis with capacity 40 kt/y of the final product
• Lignocellulose to intermediate solid, liquid or slurry bioenergy carriers via torrefaction with capacity 40 kt/y of the final product
• Lignocellulose to Synthetic Natural Gas or synthesis gas and/or to power via gasification with capacity 40 million normal cubic
metres per year (MNm 3 /y) of the final product or 100 GWh/y of electricity
• Lignocellulose to biofuels or bioliquids and/or to power including via directly heated gasification with capacity 15 million litres per
year (Ml/y) of the final product or 100 GWh/y of electricity. Production of Synthetic Natural Gas is excluded under this subcategory
• Lignocellulosic raw material, such as black liquor and/or products from pyrolysis or torrefaction, via entrained flow gasification to any
biofuels with capacity 40 Ml/y of the final product
• Lignocellulose to electricity with 48 % efficiency based on lower heating value (50% moisture) with capacity 40 MWe or higher
• Lignocellulose to ethanol and higher alcohols via chemical and biological processes with capacity 40 Ml/y of the final product
• Lignocellulose and/or household waste to biogas, biofuels or bioliquids via chemical and biological processes with capacity 6 MNm
3 /y of Methane or 10 Ml/y of the final product
• Algae and/or micro-organisms to biofuels or bioliquids via biological and/or chemical processes with capacity 40 Ml/y of the final
product
Bio Base Europe
79
Source: Bio Base Europe
About Bio Base Europe
Bio Base Europe facilities
Governance model
Funding model
• Research, innovation and training Center in the Dutch-
Flemish border region
• Open access to private sector and research
institutions
• Rights to developed technology remain property of
clients using the facility
• Revenue stream based on pay-per-project model
• Integrated multipurpose biorefinery Pilot Plant
• Modular setup of pilot process equipment
• Feedstock: regular crops, agricultural waste and non food
crops
• Technologies: Biorefining, plant fractionation, biological
conversion, chemical conversion, thermochemical
conversion
• Output: biofuels, biochemicals, bioplastics, biomaterials
and other bioproducts
• Capacity:
• Up to 10 tons of dry biomass per day
• Pilot scale, average reactor ~10 m³
• Private public partnership
• Management team: strategy and day-to-day operations
• Advisory board: PPP members and other stakeholders
(e.g. university of Ghent)
• Capex ~€ 21 million to date, almost 100% publicly
funded
• Structural funds (Interreg IV): ~ € 6 million
• Belgium (Flanders) and the Netherlands
(government and provinces): ~ € 15 million
• Opex:
• Covered through fees from research and
innovation projects
Center for Process Innovation (CPI)
80
Source: CPI Annual report 2009, Interviews
About CPI
CPI facilities
Governance model
Funding model
• Research and Innovation Center
• Privately run on pay per project model
• Open for all without restrictions on nationality
• Development lab
• 1000 L pilot facility
• 10.000 L demonstration facility
• Plug & play reconfigurable set up based on:
• Fermentation
• Chemical processing
• Extraction
• Pyrolysis and gasification facility (in progress)
• Private company in shelled model:
• Not-for-profit private foundation
• Trading subsidiary for profit
• Holding company subsidiary to nurse spin-off
companies
• Company owned by the two executive directors, no
customers co-ownership
• Advisory Board of industry and academic capacities
• Capex:
• ~€ 70 million to date
• Almost 100% publicly funded (mainly British
government through different pots)
• Opex:
• Mainly covered through project activity
• Currently no core funding, but some public
grants to help market failures
• Aim for Opex mix of 1/3 public, 1/3 private and
1/3 public-private consortia
• Projects range from £1000 to several hundred
thousand Pounds
BE-Basic
81
Source: BE-Basic
About BE Basic
BE Basic facilities
Governance model
Funding model
• Research and innovation center
• Facility not operational yet
• Open access to private sector and research players
• Preferential access to BE-Basic partners (universities,
research institutions and the private sector)
• Publicly and privately funded: Dutch public funds
(Government and provinces), EU, universities, private
sector
• Capex
• Research program (flagships): € 120 million
• Pilot facility: € 100 million
• Subsidies from regional funds and local bodies: € 30
million
• Private public partnership between universities,
research institutes and 24 companies
• PPP owns the facility and manages the strategy
and day-to-day operations
• PPP coordinator: Delft University of Technology
• Integrated second generation biorefinery, modular
setup, pilot scale
• Feedstock: agricultural waste and non food
crops
• Technologies: biological conversion
• Output: biofuels, bioplastics and other
bioproducts
Bio Demo - IAR
82
Source: ARD
About Bio Demo
Bio Demo facilities
Governance model
Funding model
• Biotechnology demonstration plant within the
innovation platform Bioraffinerie Recherches &
Innovations (BRI)
• Open facility for the scaling up of biotechnological
processes aimed at chemical intermediates production
• Publicly and privately funded: € 21 million
• European Regional Development Funds:
€ 2.5 million
• Département de la Marne: € 1.25 million
• Région Champagne-Ardenne: € 1.25 million
• Private (ARD and banks): € 16 million
• PPP between ARD and the cluster of
competitiveness IAR for biorefineries,
biotechnologies and green chemistry
• Demonstration facility
• Technology description:
• Feedstock: agricultural crops and
lignocellulosic material
• Technologies: biological conversion, extraction
and purification
• Output: organic acids, diols, etc.
• Capacity: 2,500 tones per year
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