European Non-Food Agriculture E N F A : European Non-Food Agriculture E N F A University of Hohenheim, Germany, Jürgen Zeddies and Oliver Henniges Kick-off-Meeting Mai 9th – 11th 2005 Hamburg, University Work Package 25 Bioethanol and Biodiesel
Proposed activities in the application : Cost and potential of bio ethanol and biodiesel
Regional dimension
EU-15, NUTS 2
Different raw materials
Wheat, sugar beets, maize, potatoes
Proposed activities in the application
Methodology : Farm accountancy data network (FADN) of EU-15 (1997- 2002)
Data available
About 60 000 farms
Calculation of gross margins (ARACOST)
Accomplished by standard data for sugar beet
To be completed for wheat, maize, others Methodology
Cost of raw material : Type of model already available
Comparative static approach
Results: variable cost, opportunity cost, marginal cost for different raw materials
Time dimension
Base 1997 – 2002
Reference 2008
Prognoses up to 2020
Cost of raw material
Cost of conversion : Biodiesel: RME and by products for Germany
Bioethanol: distinguished by different raw materials, and technical processes (DDGS, biogas)
For Germany
For main competitors worldwide Cost of conversion
Assessment of production potential : Raw material (oilcrops, cereals, beets)
Regional dimension (Germany, EU-15, and EU-28)
Assessment of supply elasticities Assessment of production potential
Markets for biofuel : National markets (Germany)
EU domestic market
World market Markets for biofuel
Open questions for the study : Which kind of raw material should be considered? Potatoes? Sunflower ? Soy beans?
Can other lines for biofuel be ignored (sun fuel)?
Regional dimension: EU-15 or EU-28?
Definition of time horizon (base, reference, prognoses?
Should greenhouse gas emissions in conversion processes considered as well? Open questions for the study
Links to other projects : German Ministry of Environment …. “Cost and potential of biomass”
German Ministry of Environment …. “Macro economic study of biomass for energy”
Oliver Henniges: “Bioethanol – Worldwide analyses of competitiveness”
DFG-Project Zeddies: “Mitigation strategies for green house gas emissions in agricultural”
Links to other projects
First results : Data flow
Potential for biomass from agriculture
Germany
EU-15 and EU-28
Biodiesel (RME)
Bioethanol
Production cost international
World trade / world production
World market price
Models for bio fuel markets
First results
Supply elasticity in der EU 15 : Supply elasticity in der EU 15
Supply potential for energy crops in Germany (base 1000 t) : Supply potential for energy crops in Germany (base 1000 t)
Supply potential for energy crops in EU-15 (base 1000 t) : Supply potential for energy crops in EU-15 (base 1000 t)
Biomass for energy ? Political decisions in EU :
Share of renewable energy of primary energy consumption in 2010 up to 12 %
Similar goals in member states
Various initiatives in member states to reach these goals
Germany: Renewable Energy Law (higher price for supplier)
Exemption from mineral oil tax
Biomass for energy ? Political decisions in EU
Resources :
Wood
Agricultural by products (straw)
Liquid energy from crops (bio diesel/RME, ethanol
Biogas
Resources
Heating facilities for wood pellets : Heating facilities for wood pellets Folie 19 10.05.2005 / Hamburg2/ENFA-Workshop
Markets for bio energy - Electric Energy - : Biomass from:
Wood, primarily old wood from buildings
Agricultural by products (straw)
Liquid bio energy
Biogas Markets for bio energy - Electric Energy -
Electricity plants for biomass : Electricity plants for biomass Folie 21 10.05.2005 / Hamburg2/ENFA-Workshop
Electricity plants from biogas : Electricity plants from biogas Folie 22 10.05.2005 / Hamburg2/ENFA-Workshop
Markets for bio fuel :
Bio diesel from oil crops
Ethanol
Synthetic fuel (biomass to liquid)
Biogas
Markets for bio fuel
Bio diesel plants capacity : Bio diesel plants capacity Folie 24 10.05.2005 / Hamburg2/ENFA-Workshop
Slide25 : Bio fuel in Germany
2004 only rape seed oil (RME) as poor fuel
About 1.2 mio t from about 750.000 ha
Little natural rapeseed oil in tractors
2004 three factories are producing ethanol from cereals
Why Bio ethanol? : Kyoto Protocol CO2 reduction
Energy (in-) dependence
Concrete EU target regarding biofuels:
5,75 Energy-% in 2010
Further Challenges:
Jobs in rural areas
Market relief for agricultural commodities
Alternative incomes for farmers
Maintenance of sugar beet cultivation Why Bio ethanol?
Why 100 % Tax Reduction in D? : Why 100 % Tax Reduction in D? EU Commission agreed with tax exemption, since
Production Costs = 69 Cent/l
107 Cents/l
= Gasoline price at that time
No further calculations cited
Officially no overcompensation of production costs difference only 65 % volume based energy density
Tax Relief in the EU : Tax Relief in the EU Source: FO Licht, Ethanol Production Costs – A Worldwide Survey
Bio ethanol Requirements : Bio ethanol Requirements EU Directive 2003/30 EG
Share of renewable energy in fuels in
2006 2,00 % (+0,75 % points/year)
2011 5,75 % ( 8,8 Vol.-% )
For Germany that means:
Gasoline consumption 2003: 25,7 Mio t
2,00 Energy % 10,5 Mio hl
5,75 Energy % 30,3 Mio hl Folie 29 10.05.2005 / Hamburg2/ENFA-Workshop
Required Land : Required Land Assumption: 5,75 energy-% ethanol blend Potential ethanol demand EU-25 (acc. to COLBERT): 132 mln hl
Cereals 85 %: 112 mln hl
Sugar beet 15 %: 20 mln hl
Raw material requirement:
Cereals 31,8 mln t
Sugar beet 19,9 mln t
Required land 6,4 mln ha
Cereals 6,1 mln ha
Sugar beet 0,3 mln ha
Total agricultural area EU-25: 167 mln ha
Set aside area EU-25: 7,0 mln ha
Data according to COLBERT, D: EU Need for Biofuel Import? FO Licht World Ethanol Conference 2004, London, 9. Nov. 04 Folie 30 10.05.2005 / Hamburg2/ENFA-Workshop
World Production by Country : World Production by Country Source: Dr. Christoph Berg, FO Licht, World Ethanol Conference 2003 EU need in 2010: 130 mln hl Folie 31 10.05.2005 / Hamburg2/ENFA-Workshop
International Trade : International Trade 4.16 mln hl 4.77 mln hl Now: 1.5 mln hl
Planned Mercosur Contingent 12 mln hl Source: FO Licht, Germany For comparison:
World Production 400 mln hl CBI: 2.66 mln hl Folie 32 10.05.2005 / Hamburg2/ENFA-Workshop
Bio ethanol in Germany : Bio ethanol in Germany today...
Production Costs Germany : Production Costs Germany Assumptions:
Multiple feedstock plant
a) 0,5 mln hl/year
b) 2,0 mln hl/year
Raw material
Beet campaign (90 days): beet juice
Rest of year: wheat
64 % ethanol from wheat, 36 % from beet
Wheat Price: 100 €/t
Beet Price: ?
Production Costs Germany (pWheat = 100 €/tincl. transport) : Production Costs Germany (pWheat = 100 €/tincl. transport) Folie 35 10.05.2005 / Hamburg2/ENFA-Workshop Please contact Prof. Zeddies (zeddies@uni-hohenheim)
or Oliver Henniges (henniges@uni-hohenheim)
for further information regarding this slide
Beet Price? : Beet Price? Please contact Prof. Zeddies (zeddies@uni-hohenheim)
or Oliver Henniges (henniges@uni-hohenheim)
for further information regarding this slide
Production Costs in D (pWheat = 100 €/tincl. transport) : Production Costs in D (pWheat = 100 €/tincl. transport) Folie 37 Please contact Prof. Zeddies (zeddies@uni-hohenheim)
or Oliver Henniges (henniges@uni-hohenheim)
for further information regarding this slide
Bio ethanol : Bio ethanol in Brazil
Brazil : Brazil Folie 39 10.05.2005 / Hamburg2/ENFA-Workshop Please contact Prof. Zeddies (zeddies@uni-hohenheim)
or Oliver Henniges (henniges@uni-hohenheim)
for further information regarding this slide
Production Costs Bio ethanol BR : Production Costs Bio ethanol BR Please contact Prof. Zeddies (zeddies@uni-hohenheim)
or Oliver Henniges (henniges@uni-hohenheim)
for further information regarding this slide
Production costs Brazil (2003) : Production costs Brazil (2003) 14 €/hl ! Please contact Prof. Zeddies (zeddies@uni-hohenheim)
or Oliver Henniges (henniges@uni-hohenheim)
for further information regarding this slide
Bagasse Burning : Bagasse Burning Folie 42 10.05.2005 / Hamburg2/ENFA-Workshop Please contact Prof. Zeddies (zeddies@uni-hohenheim)
or Oliver Henniges (henniges@uni-hohenheim)
for further information regarding this slide
State Support in BR : State Support in BR Mandatory blending
20-25 Vol-% depending on market situation
Tax reduction (2003)
Gasoline: 30 US-Cents/l
Ethanol: 17 US-Cents/l
Small car tax reduction
Bio ethanol in Brazil : Bio ethanol in Brazil Low feedstock costs
Largest producer worldwide
Large potential for expansion
Large-scale facilities for export exist
Rising demand by Total Flex Cars
Serious competitor for EU production
International Comparison of Production Costs : International Comparison of Production Costs Folie 45 10.05.2005 / Hamburg2/ENFA-Workshop Please contact Prof. Zeddies (zeddies@uni-hohenheim)
or Oliver Henniges (henniges@uni-hohenheim)
for further information regarding this slide
Competitiveness against Gasoline in Germany : Competitiveness against Gasoline in Germany Folie 46 10.05.2005 / Hamburg2/ENFA-Workshop Please contact Prof. Zeddies (zeddies@uni-hohenheim)
or Oliver Henniges (henniges@uni-hohenheim)
for further information regarding this slide
What about the competition of biomass for nutrition and energy? : What about the competition of biomass for nutrition and energy? 1. Relevant variables
The demand for nutrition
Population growth
Per capita consumption
The world market prices for agricultural commodities
The supply elasticity for biomass
2. Expectations for the next 20 years
population growth
World 1.1 %
EU 28 0.3%
Price developments : Price developments 1. Oil price
Increase of ca. 50 % in 25 years
Absolute 18 to 28 US $
2. Cereals
Increase of 10- 20 % in 15 years
3. Oilseeds
Decrease of 13 to 27 % in 10 years
4. Sugar
constant
Production and agricultural surpluses in EU : Production and agricultural surpluses in EU Food demand + 0,3 %/year
Production + 1.5 to 2 %/year
Set aside land 5 to 7 %
Potential relief of land from surplus production 5%
Total balance of land for biomass in EU 25
in 10 years about 22 %
In 20 years about 35 %