Developing a Canadian Forest Developing a Canadian Forest Industry Biomass Strategy-Industry Biomass Strategy-

Potential in BiofuelsPotential in Biofuels

Task 38- Task 38- Rotorua, New Zealand- Mar 24, 2004Rotorua, New Zealand- Mar 24, 2004

Australia Bioenergy Association- Australia Bioenergy Association- Sydney, Australia- Mar 26, 2004 Sydney, Australia- Mar 26, 2004

Doug BradleyDoug Bradley69 Fulton Avenue 69 Fulton Avenue ∙∙Ottawa, Ontario Ottawa, Ontario ∙∙Canada K1S 4Y7Canada K1S 4Y7

phone phone ∙ ∙ 613.730.1999 email 613.730.1999 email ∙∙douglasdouglas..bradleybradley@@rogersrogers.com.com

web site web site ∙ www.∙ www.climatechangesolutions.netclimatechangesolutions.net

Forest Industry Biomass StrategyForest Industry Biomass Strategy

Bioenergy- Forest residue, agriculture, municipal waste

Forest Industry- Policy,

Competitiveness, Energy….

Strategy Timing 2004Strategy Timing 2004

Biomass inventoryBiomass inventory

Biomass costsBiomass costs

Technology readinessTechnology readiness

Development optionsDevelopment options

Financing modelsFinancing models

Gov’t incentivesGov’t incentives

Environmental Environmental repositioningrepositioning

Apr May Jun Jul Aug Sept Oct Nov

Energy Use – 2001 Pulp & Energy Use – 2001 Pulp & PaperPaper

Oil8%Natural Gas

13%

Biomass58%

Other2% Electricity

19%

Source: Forest Products Association of Canada

Biomass: includes wood, bark, sawdust, and pulping liquor

VolumeVolume Biomass Utilization in Pulp & Paper Biomass Utilization in Pulp & Paper

Industry Industry

9.412.3

9.15.4

02468

101214161820

1990 1998

Million B

Dt

pa

SurplusUse

Forest Biomass Supply Forest Biomass Supply PotentialPotential

MBDT paMBDT pa Mill ResiduesMill Residues 5.95.9 Stock pilesStock piles 0.30.3 Pulp SludgePulp Sludge 1.01.0 Forest FloorForest Floor 0.2*- 43.1**0.2*- 43.1** TotalTotal 7.4 – 50.37.4 – 50.3

* * BW McCloy and Associates- BW McCloy and Associates- Assumes 15% recoverable (12%-chips, 3% Assumes 15% recoverable (12%-chips, 3% energy)energy)

** BIOCAP Canada** BIOCAP Canada

BC Interior- Mountain Pine BeetleBC Interior- Mountain Pine Beetle

9 million ha infested- 108 million M3

Potential from Forest FloorPotential from Forest Floor

Location of Harvest SlashLocation of Harvest Slash

00.10.20.30.40.50.60.70.80.9

1

Ontario Quebec Manitoba BritishColumbia

RoadsideAt Stump

Biomass Long Term SupplyBiomass Long Term Supplyll

0

5

10

15

20

25

30

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Forest MgtAfforestationPine BeetleHarvest SlashMill Residues

Technology ReadinessTechnology Readiness

Direct CombustionDirect Combustion Bio-oil from Fast Pyrolysis- Bio-oil from Fast Pyrolysis- 100 TPD in 100 TPD in

20042004

GasificationGasification Bioproducts, biochemicalsBioproducts, biochemicals

Biomass Long Term Plan Biomass Long Term Plan Development Options- hypotheticalDevelopment Options- hypothetical

0

5

10

15

20

25

30

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Forest MgtAfforestationPine BeetleHarvest SlashMill Residues

Combustion

Fast Pyrolysis Oil

Gasification

Financing Models NeededFinancing Models Needed Much capital neededMuch capital needed Forest Industry has no money!Forest Industry has no money!

Focus $capital on core businessFocus $capital on core business Need to explore options to funnel Need to explore options to funnel

$investment into bioenergy$investment into bioenergy Developer ownershipDeveloper ownership Joint VenturesJoint Ventures Flow through sharesFlow through shares Oil&gas exploration examplesOil&gas exploration examples

Government PolicyGovernment Policy ExistingExisting

REDI REDI (Renewable Energy Deployment Initiative)(Renewable Energy Deployment Initiative) max $80,000max $80,000

Cdn Renewable & Conservation Expenses (Tax)Cdn Renewable & Conservation Expenses (Tax) Tax Depreciation 43.1 for generation equipmentTax Depreciation 43.1 for generation equipment MIP MIP (Market Incentive Program) 40% refund of marketing costs only(Market Incentive Program) 40% refund of marketing costs only

1010¢¢ per litre excise tax exemption on ethanol fuel per litre excise tax exemption on ethanol fuel 20% gov’t power purchases from renewable20% gov’t power purchases from renewable Wind Power 1Wind Power 1¢/KWh production incentive ¢/KWh production incentive $250 million $250 million

Need meaningful incentivesNeed meaningful incentives Feed-in-tariffs (price premiums)Feed-in-tariffs (price premiums) RPS (Renewable Portfolio Standard)RPS (Renewable Portfolio Standard) Grants (capital support)Grants (capital support)

Environmental RepositioningEnvironmental Repositioning

Loss in NutrientsLoss in Nutrients Most soil nutrients from roots Most soil nutrients from roots Most agb nutrients in needles/leavesMost agb nutrients in needles/leaves Have to eliminate “misinformation”Have to eliminate “misinformation”

Particulates- Particulates- eg. Williams Lakeeg. Williams Lake

NGO workshop planned in SeptemberNGO workshop planned in September

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

biomass N P

Needles

Branches

Stem

Strategy Timing 2004Strategy Timing 2004

Biomass inventoryBiomass inventory

Biomass costsBiomass costs

Technology readinessTechnology readiness

Development optionsDevelopment options

Financing modelsFinancing models

Gov’t incentivesGov’t incentives

Environmental Environmental repositioningrepositioning

Apr May Jun Jul Aug Sept Oct Nov

Company founded in 1990

BioTherm™ - a patented fast pyrolysis process that converts forest and agricultural biomass residue into a liquid fuel called Bio Oil, char and non-condensable gases.

Independently proven as reliable, replicable and commercially scaleable

2 plants built (Vancouver Pilots)

2 commercial demo plants under construction (2004)

Aim- low cost producer of bio oil / commoditize technology and output.

Dynamotive Overview

What Is Fast Pyrolysis?Rapid heating of biomass in the absence of oxygen.

BioOil (yield 55 – 73%) Char (yield 15 – 25%)

Non-condensable gases are recycled in the process.

Feedstocks - agricultural and forest residue including: bark and whitewood , sugar cane residue, wheat straw, rice hulls (over 120 feed stocks tested).

BioTherm Process

Clean burning CO2 neutral fuel

Alternative to fossil fuel in gas turbines and boilers Characteristics

No SO2 Emissions

Trace NOx Emissions

Transportable and storable Produced from non-depleting agricultural and forest biomass19.5 MJ/litre ( vs 36.9 for light oil)

What is Bio Oil?

Electricity and Process Heat

Electricity Export to Grid

Lumber dry kilns, pulp mill lime kilns, diesels

Bio Oil

Bio Oil Refinery

Derivative Products of Bio OilDerivative Products of Bio Oil

Resins / Chemicals / Bio Methanol ++Resins / Chemicals / Bio Methanol ++

Europe Japan United States

Green Power Generation

Shipping / Export of Bio Oil

Char

Heat Briquettes Activated Carbon

15 Tonne Per Day Pilot Plant

Installed Capital Cost Projections

$0

$100

$200

$300

$400

$500

$600

$700

BT1 @

0.5

tpd

BT1 @

1.4

tpd

BT1 @

2 tp

d

S&W R

epor

t

BT2 @

10

tpd

BT2 @

15

tpd

100

tpd

200

tpd

400

tpd

Plant Scale

Est

ima

ted

Pro

du

ctio

n C

ost

($

US

10

00

's /

tpd

ca

pa

city

)

Prod Cost Delta 18Nov02

1996 to 2003 Capital Cost Progression and Projections

$29

1996 to 2003 Production Cost Progression and Projections.

Production Cost Projections

$10.00

$15.00

$20.00

$25.00

$30.00

Q4/98

Q4/99

Q1/00

Q2/00

Q3/00

Q1/01

Q4/02

2003

/04

Date of Cost Projection

Fu

lly

Lo

ad

ed

Pro

du

cti

on

Co

st

($U

S/B

OE

@ 4

00

tp

d)

Projected Cost$14.00 /BOE

Scale up to Commercial

Prod Cost Reduction 18Nov02 v1* Includes all CAPEX and OPEX with a 15% ROE

*

STAGE 1: Industrial Fuels - Boilers, Kilns, Furnaces Sugar Industry, District Heating, etc.

STAGE 3: Transportation Fuels Blends, Syngas, Bio-Methanol

STAGE 2: Power Generation - Turbines, Diesels Small Scale Industrial, Remote

Higher

Lower

ValueAdded

STAGE 4: Chemical Refining Derivative Products

Staged Development

Time

1996 / 2000 2001 2002 2003 2004 >>>>>>

R&D Partners: Technology:Tecna Engineering (Scale up, integration, design)

UMA Engineering (Scale up, design, modularization)

Harper International (Reactor Modeling, scale up, design, construction)

Ramsay Group (Modular fabrication, design)

Resource Transform International (RTI): Technology base

Applications (amongst other):CanFor: Lumber Kiln applications (Industrial test completed)

Magellan Aerospace Corp, Orenda: Turbine (CHP)

Leading Briquette Manufacturer: Briquette production from char

University of Iowa + Alliant Energy: CHP applications

University of Saskatchewan: Activated Carbon

University of New Hampshire – Bio Oil applications and market opportunity

Bio Mass Refinery: Dr. Desmond Radlein

Success through strategic partnerships

Keys to successKeys to success Solid patented processSolid patented process Resolved technical issues- Resolved technical issues- stabilitystability

Multiple feedstocks- Multiple feedstocks- sawdust. Bark, sugar cane sawdust. Bark, sugar cane etc.etc.

No steam host neededNo steam host needed Modular plants- Modular plants- 100 TPD plant on 7 skids100 TPD plant on 7 skids

Moveable plant- reduced riskMoveable plant- reduced risk Self-sustaining plants (2-3 years)Self-sustaining plants (2-3 years) Partnerships- Partnerships- eg Orenda 2.5 MW eg Orenda 2.5 MW

packagepackage

First Modular 100 TPD PlantFirst Modular 100 TPD Plant

Total ProductionMills 100Production 9.3 M tpySurplus 3.0 M tpy

Chetwynd

PrinceGeorge

Kamloops

Houston

Vancouver

Grande Prairie

Nelson

Calgary

High Level

Edmonton

B.C. Alberta

BC / Alberta Surplus Wood Residue

200 tpd

300 tpd

500 tpd

800 tpd

Plants

Establish DynaMotive’s technology as benchmark.

Complete initial wood based commercial projects, launch bagasse project

Establish order book for plant construction- Canada / US / Europe / Asia / Latin America.

Launch construction in US, Europe & Latin America. Contract Asia construction

Migrate technology to dirty waste streams (Construction wood waste, Sewage sludge and animal waste).

Scale reactor for fixed and mobile plant market opportunities.

Launch research into mobile fuel applications. Complete activated carbon and lime kiln program.

Establish model for biomass reserves, like oil exploration and production model.

Develop bio oil export model / first shipment to Europe from Canada contracted.

Corporate Objectives 2004

Establish network of agents / representatives. Support by European desk in Vancouver Business / Financial Modelling / Technical support.

European Desk: Reports to CEO. Natalia Stepanova (Business Development), Ivette Vera (Technical support), Nathan Neumer (Communications). Support Services (Technical Group, Financial Services Group).

Year 1 Establish fabrication capabilities based on Canadian Model. Establish Flagship project Export plant from Canada. Feed conditioning Bruks Klockner, Generation equipment Orenda (70% European content), integration European Engineering (Three candidates – Spain / Germany).

Agency’s France, Switzerland, Italy, Austria and CIS Countries. Representation Germany, Sweden, Bulgaria, UK, Poland, Spain, Belgium. Others to be advised.

Overview European Strategy

Dynamotive Development PlanDynamotive Development Plan

2 8 18 29 42 5802,0004,0006,0008,000

10,00012,00014,00016,00018,00020,000

TPD

2003 2004 2005 2006 2007 2008

Operating Capacity Projects in Development Plants

STAGE 1: Industrial Fuels - Boilers, Kilns, Furnaces Sugar Industry, District Heating, etc.

STAGE 3: Transportation Fuels Blends, Syngas, Bio-Methanol

STAGE 2: Power Generation - Turbines, Diesels Small Scale Industrial, Remote

Higher

Lower

ValueAdded

STAGE 4: Chemical Refining Derivative Products

Staged Development

Time

1996 / 2000 2001 2002 2003 2004 >>>>>>

Biomass Refinery

Critical Precursor: Reliable High Quality BioOil Supply

ConclusionConclusion Canbio-FPAC promoting bioenergy Canbio-FPAC promoting bioenergy

LT biomass development strategyLT biomass development strategy Bio-Oil can be major part of strategyBio-Oil can be major part of strategy Dynamotive a world leader in fast Dynamotive a world leader in fast

pyrolysispyrolysis Excellent process, modular plant designExcellent process, modular plant design Global development scheduleGlobal development schedule

New business opportunity for forest New business opportunity for forest industryindustry