RE: Research Topics

["Weststeijn, Andries" <Andries.Weststeijn@essent.nl>]

Tami,

In my mind I split the issue in two:
-the external conditions determining the go or no-go of (bio)project
decisions
-the pragmatic question of how to realize a (bio)project within the
limitations imposed

The first item includes all the societal and political issues (the choices
and priorities, incl taxation), as well as dealing with uncertainties of
fossil supply (including how nervous one gets in the short term). 

Although the summation of these considerations differs from region to
region, on a project level it is rather irrelevant HOW the break-even price
of the competing fuel is set. In other words on a project level it is almost
irrelevant whether oil becomes 60 USD/barrel due to low supply or due to
taxation.
Fact of the matter is that at 40 or 60 $/barrel other biotechnologies come
into play than at 100 $/barrel.
This last sentence is what matters to the R&D question by Anouk!

Interestingly enough, the general cost picture in those regions of the world
where biomass technology gets full attention from R&D through full-scale
application, isn't really that far apart.
So, let's accept that the TIMING for reaching a certain break-even price for
biomass can and will differ from region to region. But that the net
break-even pricing LEVEL (after factoring in the external influences, incl
subsidies ) is rather universal for the participants to this List.

Based on such a net cost pricing level, view points could be exchanged as to
how the biomass community can prepare for an gradually increasing role in
energy supply. And also rate the biomass options on equivalent competing
fossil fuel price level for break-even.
R&D on biomass issues (the subject of this thread) can help lowering the
break-even price level for selected options, and the best prospects for
price reduction should get first attention.

Compare oil companies having a portfolio of options rated to price level.
Some options (like very deep water exploration, shale oil or oil sands)
simply lay on the shelf till the equivalent price level has been reached.
However, if in the mean time R&D delivers cost improvements or risk
minimization (like through 3D-geological modeling) options simply move up a
notch on the waiting list. 

You ask:
>I'd also ask 'How can bioenergy learn from & piggyback on fossil-fuel
infrastructure?' 

Learning and piggybacking will automatically be done. People tend to look at
similar situations to predict costs and potential. The question is rather,
who is in the position to learn and piggyback.
We studied oversees import of biomass, and obviously made use of our
knowledge of the world wide steam coal shipping infrastructure (coal being
shipped in from Australia, Indonesia, China, South-Africa, Columbia etc to
Western Europe). 
The coal bulk carrier rates are clearly significant. 

Furthermore, in our current biomass cofiring work, we came to the conclusion
that there is a lot to be learned from the bulk cattle feed industry. Bulk
transport, bulk storage, risk and handling.
At first an unlikely combine: coal + cattle feed, but it works.

You ask:
>What did fossil fuel do 'right' to become so prevalent?
>Sure, much success came because there were no alternatives. In many
countries (but not everywhere) the story is different these days,
because the demand is established but we are talking about switching
sources. 
>Anyway, fossil companies neatly switched to promoting gasoline
when kerosene lighting markets dried up in the early part of this
century, so they can (or could) dance if they had to. 

They still do!! They move with the times and accept switches. In the big
picture they behave flexible (contrary to popular believe).
Some examples.
In the seventies all big oil companies worked on adding uranium to their
energy portfolio, next to oil, gas and coal.
Eventually, after the nuke plant building boom tapered off, all big oil
companies sold off these nuclear holdings again, and many sold off their
coal holdings as well.
RD/Shell bought huge tracts of wood plantations in the eighties and did lots
of R&D on seedlings. Perhaps that will eventually pay off for them.
In the early eighties Exxon tried to go big time in the IT market, competing
with IBM, HP in the upcoming office automation business. They also went into
heavy electro motors manufacturing (including special energy savings
technology). But after refocusing on core competences, both these divisions
were sold off again.
Nowadays, some of big oil are entering the renewables market in force
(budgets in the hundreds of millions of USD). BP and RD/Shell are buying
themselves in -big time- into solar. 
RD/Shell just started to do the same with wind, including offshore (their
area of expertise). 
ExxonMobil goes after hydrogen.
Already for at least 30 years RD/Shell routinely makes future scenario's up
to 50 years into the future, which is the basis for the macro company
decisions as to promising business area's. I believe Mobil used to do the
same.

Their time horizon may be long, but they certainly are not static molochs!

You say:
>What does that sort of focus-shift require? There were lots of small oil
producers,
wildcatters etc. who failed along the way. Who succeeded, why, how
(merging with the big guys??), and are these paths inevitable for
bioenergy? 
>Will there someday be a 'Standard Biomass' monopoly breakup?  
>Just curious.

Very interesting question: will biomass energy eventually become dominated
by the big internationals, will there be permanent room for small scale
entrepreneurs, will it be a mixture of both?

I mentioned the cattle feed industry in terms of handling and equipment.
As far as cattle feed as a product, some of the trading houses in cattle
feed work on a truly large scale and worldwide. So, although cattle feed may
appear to be a local theme, a similar large scale development for biomass
could well emerge.

My expectation is that eventually there will be an increase in scale in the
biomass-for-fuel trade.
The margins will never be high, so economy of scale will automatically kick
in as a driving force.
Also, there may be a separate biofuels industry concentrated on producing
unified biofuels to specification, by way of pretreatment and mixing.  

Personally, I do not expect the bulk utility industry to remain doing the
biofuels collecting, handling and mixing etc themselves. It is just too
different from the rest of the work at hand. 
Therefore, a typical area for subcontractors and biofuel suppliers to
specialize in.
A new fuel sub supplier industry could emerge at different levels of scale.

Typical involvement of the big energy companies (not being the power
generating utilities) could be:
-conversion from biomass to chemical building blocks
-long distance biomass energy trade (continent-to-continent, already
practiced for paper wood)
-direct green electricity generation fully outside the classical utility
world (already practiced for gas)

best,
Andries



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