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BIO-SNG FEASIBILITY STUDY – ESTABLISHMENT OF A REGIONAL PROJECT4.5 TOTAL AMOUNT OF BIOMASS RESOURCE FOR BIO-SNG PRODUCTIONNotwithstanding the considerations outlined above it is necessary to postulate the amount of biomass fuel(„pure‟ and waste derived) that could reasonably be procured for the production of SNG, both fromindigenous and overseas sources, and thereby form an estimate of the significance of the ensuing Bio-SNG production in the UK gas market. Figure 4.3 shows such a figure, assuming that 1EJ of biomasscould be sourced indigenously and from international markets, and that 33% of that could be used for theproduction of Bio-SNG for use in heat and transport applications at a conversion efficiency of 66%. Thiswould represent 15% of the UK domestic gas market.Figure 4.3Potential role for Bio-SNG as a function of the UK domestic Gas market4.6 COMMERCIAL CONSIDERATIONS FOR „PURE‟ BIOMASSTo see biomass as simply a replacement for a fossil fuel such as coal is a mistake on account of itsdispersed provenance, its chemistry, humidity and its lower energy and bulk densities. It is equallyimportant to recognise that biomass has the potential to be a feedstock across a wide spectrum of usersand industries, whether transformed into synthesis gas (syngas) - the universal feedstock for the organicchemicals industry – synthetic materials such as plastics resins and polymers, drugs and pharmaceuticals- power generation, liquid transport fuels, and SNG, or used for space heating or as it is as a constructionmaterial - timber. The growing demand for biomass in these applications will set the market priceglobally. It is also evident that potential demand for biomass feedstocks across all of these sectors could28
BIO-SNG FEASIBILITY STUDY – ESTABLISHMENT OF A REGIONAL PROJECTeasily exceed global production capacity from the outset, a situation that paradoxically is only justbeginning to impact on crude oil prices at the end a century of exponentially increasing oil production froma vast but finite resource. Competing users of biomass feedstocks will set the market price, withgovernmental support mechanisms for biomass electricity already having a dominant effect and beingcriticised as contributing to unfair market distortion 29 .The traded price of clean biomass fuels for biomass power generation is today in the range of £6 to £7per GJ measured as net calorific or lower heating value, a price that would be unaffordable by operatorsof biomass power stations without support through a variety of inward looking national supportmechanisms 30 . The relative generosity of the various national support mechanisms is not formallycoordinated throughout the EU, and it is most certainly uncoordinated globally. Asymmetry betweennational support schemes for power generation from globally traded biofuels remains a significantcommercial threat to the viability of schemes that utilise such fuels 31 . It is also the case that asymmetry ofsupport mechanisms across market sectors within the UK constitutes a business threat to any companyfor whom consequent price distortions would affect their business case. (Users in receipt of the mostadvantageous support will be market price makers, all others will be price takers.)The effect of asymmetry in support mechanisms is to give one class of users a dominant position in thefuel market In conditions of supply constraint this constitutes a lock-out to other potential users of abiomass resource. Hence in the domestic UK situation the Renewables Obligation (and the SRO andNIRO) rewards electrical power generation more favourably than would the RTFO reward the use of anequivalent amount of resource in the production of synthetic transport fuels. Accordingly the purchaser ofa biomass resource will seek to use it in the application yielding the greater added value – powergeneration. Developers of biomass to liquids plants will not move until an equivalence of incentives (atleast) would be forthcoming. In contemplating the development of an SNG facility, considerations ofanalogous factors should be undertaken; these would include the impending Renewable Heat Incentive(RHI), fuel costs, the specific SNG yield, power sales prices, and Bio-SNG selling price, together withplant capital and operating costs.4.7 COMMERCIAL CONSIDERATIONS FOR WASTESThe production of wastes does not mean necessarily that they are available to the market. Municipalauthorities have for many years been required to meet increasingly onerous targets for the long termmanagement of their waste streams. This has involved local authorities in committing to long termcontracts with waste contractors, in which their waste streams are likely to be tied up for periods of 20 to29 See BWPI Federation – “Large-scale biomass threatens 8,700 UK jobs... ...and risks a 1% increase in UKemissions” http://www.wpif.org.uk/Make_Wood_Work_News.asp30 Coal prices are in the region of £2 per GJ; the price differential to biomass being more than sufficient topurchase carbon offsets or allowances with carbon trading at any price up to approximately £30 per tonne.31 Note the way in which different approaches to support for transport biofuels in North America and UKprecipitated a sequence of events that seriously damaged the UK indigenous biofuels industry in 2008/9.29
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