Advanced Biofuels Conference 2019 - September 17 - 19 - Stockholm
ETIP Bioenergy workshop “How to accelerate commercialization of biorefineries for large scale biofuel production? - The role of the financial sector and good examples from industry”, 19 September 2019
In the framework of the Advanced Biofuels Conference organized by Svebio in Stockholm (SE), ETIP Bioenergy planned a workshop focused on the viable financial tools which can accelerate the commercialization of biorefineries for large-scale biofuel production. Relevant examples from industrial players at European level were showcased as well, with the goal of reaching out the audience and giving some hand-on information for future projects to come.
Patrick Klintbom, chairman of ETIP Bioenergy, shortly introduced the event and provided an overview of the bioenergy & advanced fuels sector, its related challenges and opportunities from a perspective of financial tools and frameworks (in particular EU instruments) able to support complex projects of biorefinery up-scaling.
Later on, Johanna Mossberg, Focus Area Manager – Fossil Free Transport at RISE Research Institutes of Sweden, opened the floor to the panelists and moderated the discussions among representatives from the financial and industrial sectors and the participants.
The Renewable Energy Directive recast (RED II), in the wake of what already included in other programmatic documents with a broader scope (such as the Strategic Energy Technology - SET Plan and the Paris Agreement, among others), calls for ambitious goals when tackling renewable transport fuels. The implementation of biorefineries aiming to a large-scale biofuel production needs to be facilitated and significant capital have to be mobilized in the very near future if the sector intends to really contribute in decarbonizing the EU economy and society.
Insights from the financial sector
In this section, several topics were tackled: which are the challenges and pre-requisites for large-scale capital investments in new sustainable technologies? Which are the best strategies for de-risking such investments? Which innovative funding schemes are available? Any special conditions associated with investments in biorefinery technologies worth to be mentioned?
Amelie Nordin, Sustainable Finance Manager at Swedbank (Sweden) and Patrik Marckert, Senior Manager at Nordic Investment Bank (Finland), explained how bank institutions are witnessing an increasing interest towards similar types of projects by their customers. Unfortunately, how to mitigate the related financial risk (especially when dealing with first-of-a-kind plants) is still an open issue. Sustainable biofuels and advanced fuels still depend a lot on policies and legislations and are very much subject to a still-not-well-defined regulatory environment. This represents a barrier when it comes to calculate financial risk and being able to invest.
Several participants to the workshop confirmed the existence of a gap in terms of dialogue and reciprocal understanding between industrial/innovation actors and investors. Focusing the attention on bridging this gap could very much support the development and implementation of more projects in an easier way for investors.
Lars Waldheim, from the Waldheim Consulting (Sweden), introduced one of the mechanisms that the European Union put into force for supporting breakthrough technologies and processes: the Innovation Fund. Indeed, this fund aims to increase the deployment of new technologies through ad-hoc financial incentives. With an improved risk sharing (in comparison to current market conditions), grants of Innovation Fund can cover up to 60% of the total capital, in addition to some flexibility. All in all, it can give a real boost to risky technological projects (highly innovative technologies and big flagship projects with European value added), as it represents one among the world’s largest funding programs for the demonstration of innovative low-carbon technologies. The first call for projects, counting on a total of EUR 10 billion to invest up to 2030, is expected next year, in 2020 (please access to the official link).
Successful projects from European industries
A round table of presentations and discussions provided a concrete overview of challenges encountered by industries when scaling up biorefinery technologies and how they had been overcome.
Mischa Valk, Head of Business Development at SkyNRG (The Netherlands), focused its speech on DSL-01, the first dedicated European production unit of sustainable aviation fuel (SAF). The project has been recently announced as a EUR 250 million investment, starting in 2022 to annually produce 100,000 tonnes of SAF and other by-products (as bioLPG). The chosen feedstocks used for production will be waste and residue streams, such as used cooking oil, coming predominantly from regional industries. As a representative of a global market leader for sustainable aviation fuel, Misha provided several enabling factors that can support technology deployment, such as: establishing long-term off-takes for SAF and LPG; a market strategy focused on de-risking business cases; the continuous involvement of committed partners with proven technologies. This has to go along with a stable, long-term policy framework at EU level (for example, the transposition of REDII into national legislations is crucial to SkyNRG and market operators in the aviation fuels sector).
Then, Lars Lind, Managing Director of Adesso BioProducts AB (Sweden), agreed that long-term off-takes are important enablers. Considered the complexity of the bioenergy market, a working environment needs stability at policy level, with CO2 emissions priced. According to Lars, more efforts have to be put on aligning long-term visions and legislation, so creating a more favourable context where the full potential of investments could be applied to novel projects and processes.
Based on the positive results, obtained by ADVANCEFUEL, an EU H2020 project, on gasification of lignocellulosic material to liquid biofuels, Filip Johnsson, Professor at Chalmers University of Technology (Sweden), provided an overview with relation to biorefineries for large-scale biofuels production. Several technologies are already available for most process steps, bringing down capital cost and lowering total financial risk of the operation. On the contrary, the costs of feedstock in gasification can represent a risk, as many operators in different sectors are choosing biomass for their processes, from bioenergy to production of bio-products within the “bioeconomy world”. In order to face this and new upcoming non-technological barriers, it is of utmost importance to agree upon common criteria.
Take-home messages
The workshop represented a positive experience to collect valuable hints and feedbacks from key actors of the European financial and industry sector, already experienced in challenging but very rewarding processes of deployment and up-scaling of large-scale biofuels production technologies.
The majority of stakeholders taking part to the workshop (about 50 international participants) agreed that several technologies for the production of advanced biofuels exist and are mature enough to be considered for a first-of-a-kind plant. In order to meet the commitments made in occasion of the Paris Agreement and in line with all main programmatic documents in the sector, it is of utmost relevance that effective financial instruments are in place to support each stage of the innovation value-chain in the bioenergy sector, from the research and development step to the full-scale production plant. Only in this way, together with a clear and communitarian action focused on policy and legislation, the bioenergy & advanced fuels operators can deliver what expected, to a higher level for the EU growth and society.
Programme
- Introduction to the challenges ahead regarding large scale mobilization
of capital for upscaling and deployment of Biorefinery technologies
Patrik Klintbom, chair ETIP Bioenergy
- The perspective of the financial sector
- Amelie Nordin, Sustainable Finance Manager, Large Corporations and Institutions, responsible for sustainable finance offering and advisory, Swedbank
- Patrik Marckert, Senior Manager, Nordic Investment Bank
- Lars Waldheim, Waldheim Consulting (the perspective of the Innovation Fund) - Good examples from industry and development projects
- Misha Valk, Head Business Development, SkyNRG
- Lars Lind, Adesso BioProducts AB
- Filip Johnsson, Chalmers and the ADVANCEFUEL project - Summary
Patrik Klintbom and Johanna Mossberg
The workshop was arranged in collaboration with ETIP Bioenergy and the project ETIP Bioenergy SABS II.