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European Non-Food Agriculture E N F A

European Non-Food Agriculture E N F A. Kick-off-Meeting Mai 9 th – 11 th 2005 Hamburg, University. Work Package 25 Bioethanol and Biodiesel. University of Hohenheim, Germany, Jürgen Zeddies and Oliver Henniges. Proposed activities in the application.

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European Non-Food Agriculture E N F A

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  1. European Non-Food AgricultureE N F A Kick-off-MeetingMai 9th – 11th 2005Hamburg, University Work Package 25 Bioethanol and Biodiesel University of Hohenheim, Germany,Jürgen Zeddies and Oliver Henniges

  2. 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

  3. 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

  4. 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

  5. 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

  6. Assessment of production potential • Raw material (oilcrops, cereals, beets) • Regional dimension (Germany, EU-15, and EU-28) • Assessment of supply elasticities

  7. Markets for biofuel • National markets (Germany) • EU domestic market • World market

  8. 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?

  9. 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”

  10. 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

  11. Supply elasticity in der EU 15 Increase on Cereals Oilcrops Sugar beets Price level partial aggregated partial aggregated aggregated 0 - 10 % 1,31 0,65 2,97 2,33 2,8 10 – 20 % 0,0157 - 0,010 0,05 - 0,13 1,34 20 – 30 % 0,0136 - 0,022 0,03 - 0,11 1,23 30 – 100 % 0,0057 - 0,010 0,016 - 0,13 0,59

  12. Supply potential for energy crops in Germany (base 1000 t)

  13. Supply potential for energy crops in EU-15 (base 1000 t)

  14. 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

  15. Resources • Wood • Agricultural byproducts (straw) • Liquid energy from crops (bio diesel/RME, ethanol • Biogas

  16. Heating facilities for wood pellets 10.05.2005 / Hamburg2/ENFA-Workshop Folie 19

  17. Markets for bio energy- Electric Energy - • Biomass from: • Wood, primarily old wood from buildings • Agricultural by products (straw) • Liquid bio energy • Biogas

  18. Electricity plants for biomass 10.05.2005 / Hamburg2/ENFA-Workshop Folie 21

  19. Electricity plants from biogas 10.05.2005 / Hamburg2/ENFA-Workshop Folie 22

  20. Markets for bio fuel • Bio diesel from oil crops • Ethanol • Synthetic fuel (biomass to liquid) • Biogas

  21. Bio diesel plants capacity 10.05.2005 / Hamburg2/ENFA-Workshop Folie 24

  22. 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

  23. 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

  24. 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

  25. Tax Relief in the EU Source: FO Licht, Ethanol Production Costs – A Worldwide Survey

  26. Bio ethanol Requirements 10.05.2005 / Hamburg2/ENFA-Workshop 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

  27. Required Land Assumption: 5,75 energy-% ethanol blend 10.05.2005 / Hamburg2/ENFA-Workshop 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

  28. World Production by Country EU need in 2010: 130 mln hl 10.05.2005 / Hamburg2/ENFA-Workshop Source: Dr. Christoph Berg, FO Licht, World Ethanol Conference 2003 Folie 31

  29. International Trade 10.05.2005 / Hamburg2/ENFA-Workshop Now: 1.5 mln hl Planned Mercosur Contingent 12 mln hl CBI: 2.66 mln hl 4.16 mln hl 4.77 mln hl For comparison: World Production 400 mln hl Source: FO Licht, Germany Folie 32

  30. Bio ethanol in Germany today...

  31. 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: ?

  32. Production Costs Germany(pWheat = 100 €/tincl. transport) 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 Folie 35

  33. Beet Price? Please contact Prof. Zeddies (zeddies@uni-hohenheim) or Oliver Henniges (henniges@uni-hohenheim) for further information regarding this slide

  34. Production Costs in D(pWheat = 100 €/tincl. transport) Please contact Prof. Zeddies (zeddies@uni-hohenheim) or Oliver Henniges (henniges@uni-hohenheim) for further information regarding this slide Folie 37

  35. Bio ethanol in Brazil

  36. Brazil 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 Folie 39

  37. Production Costs Bio ethanol BR Please contact Prof. Zeddies (zeddies@uni-hohenheim) or Oliver Henniges (henniges@uni-hohenheim) for further information regarding this slide

  38. Production costs Brazil (2003) Please contact Prof. Zeddies (zeddies@uni-hohenheim) or Oliver Henniges (henniges@uni-hohenheim) for further information regarding this slide 14 €/hl !

  39. Bagasse Burning 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 Folie 42

  40. 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

  41. 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

  42. International Comparison of Production Costs 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 Folie 45

  43. Competitiveness against Gasoline in Germany 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 Folie 46

  44. 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%

  45. 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

  46. 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 %

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