Malaysia, in particular, has outlined the broad contours of a programme to leverage the entire biomass from palm plantations, in contrast to just exploiting the fruit as food, for oleochemicals production or as raw material for biodiesel. The Malaysian government reckons the amount of biomass available will rise from about 80-mt now to about 100-mt by 2020, driven by increases in yield, not acreage. The price points at which this will be available will be determined by costs of transportation from plantations to processing mills, but the government estimates that at a globally competitive price of US$80 per tonne about 25-mt should be available.
Competitive pricing challenges
Mr. Lars Hansen, Regional President (Europe), Novozymes, an enzymes producer, warns that the bio-refining industry is up against a very efficient and well entrenched industry with a strong value chain, viz. the petrochemicals industry. "We need to compete against them, and this is not feasible unless feedstock pricing is right," he adds.
The significance of what the bio-refineries have to compete with becomes obvious when one eyes the size of the competition: nearly 87% of global chemical production still relies on fossil fuels and a significant portion of this is made in large plants with mature, wellunderstood technologies and significant economies of scale. Contrast this with the small-sized operation of even the largest bio-refinery in the world, even granting the early stage of its development!
Mr. Wyse believes the new technologies can be competitive in the current markets for chemicals, only if sugars can be produced from them in the range of 25-30 cents per kg.
Mr. Verbruggen believes the rising cost of feedstocks is cause for worry. He cites the example of corn, which traditionally ruled at US$2-3 per bushel, but now sells for US$6.50 after touching a high of US$8. "One has seen a similar spike in the price of sugar. Biomass derived products can still compete as long as oil rules above US$100 per barrel, but margins will be squeezed," he says.
Mr. Per Dahlen, AUM Business Creations Pte Ltd., a Singapore-based consultancy, says the key to success in the business is creating the right partnerships, especially with feedstock producers. "If we took all the sugar and vegetable oils that are produced in the world and converted them to fuels, there will still not be enough to meet current market needs, let alone that of the future."
Mr. Derek Atkinson, Business Development Manager, Purac (USA), a leading producer of lactic acid, believes investors need to feel confident that the biomass supplier can consistently provide over the long-term. "Incentives that encourage options such burning of biomass for power generation, serve to discourage investments in more far sighted technologies."
Dr. Manfred Kircher, Cluster Industrielle Biotechnologie, Germany, says that given the voluminous nature of biomass and the difficulty of moving materials long distances in a cost-efficient manner, the first transformations biomass will necessarily have to happen close to the source of the feedstock.
Cellulosics are coming, but the price at which the fermentable sugars are available holds the key!