The role of the industry
Integration of biofuel production with existing industry was studied, as well as how different parameters affect biofuel production costs, the choice of technologies and biofuels, and the localisation of new biofuel plants. A methodology was developed considering inclusion of detailed, site-specific conditions for potential host industries in the spatially explicit BeWhere Sweden model.
Total and specific investment requirements to meet different biofuel production targets, with and without alternative investments considered, as well as with and without the possibility for alternative investments are analysed. Incremental investment requirement indicates additional cost compared to alternative investment in conventional technology.
The results show a general benefit from integration with forest industries compared with stand-alone localisations. This is especially true when biorefinery investments are done in conjunction with, or as alternative to, other investments on site (e.g. boilers), as the alternative investment credit reduces the biorefinery investment cost. Additional benefits can be gained when the biorefinery investment can replace capital intensive equipment at the host industry, which can significantly improve the economic performance. This demonstrates that the Swedish industry could play a vital role in reaching a cost efficient large-scale implementation of lignocellulosic biorefineries.
Biofuel production costs
Biofuel production pathways that are seen as commercially relevant in the near future were evaluated. The pathways belong to either the liquefaction-hydrotreatment conversion route or to the gasification-synthesis route. A particular focus was put on integration with existing pulp mills and crude oil refineries. The results suggest that the income from biofuel sales is enough to cover the expenditure on commodities, thus all the pathways has a positive specific investment margin.
When comparing with investment cost estimates, both gasification-based and liquefaction-based pathways demonstrate relatively robust profitability for both current and future energy market scenarios and for different production scales.
The results indicate significant potential in Sweden for biofuel production from woody biomass by investing in new integrated production plants. However, competing biomass users risk increasing biomass costs at ambitious biofuel production targets. There are many different ways to reach high levels of biofuel production in Sweden, at reasonable costs, and the dependency on specific locations or technologies is not particularly strong.
Substantial total capital requirement for new biofuel production investments is needed, but alternative required industrial investments at the host sites can dampen the effects. The cost of biomass and the biofuel plant capital cost generally dominate the biofuel cost, but the cost for biomass transportation and biofuel distribution can also have a significant impact. Economy-of-scale and high biomass-to-biofuel conversion efficiencies provide the largest potentials for decreased production costs, which benefits large-scale gasification based biofuel production. This stands in contradiction against the current actual development regarding investments in biofuel production, where the trend is towards less capital intensive technology tracks, as well as towards drop-in fuels that can be upgraded in existing refinery infrastructure.