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GSR 2015

46 02 MARKET AND INDUSTRY TRENDS Solid Biomass Industry During 2014, a large number of companies was actively engaged in supplying equipment and bioenergy plants that convert solid biomass into upgraded fuels (mainly wood chips and pellets) and then into heat and electricity. Although the focus of sustainability criteria continued to be on biofuels, there was some discussion related to solid biomass. The European Commission confirmed that it would not publish criteria for solid biomass, leaving this responsibility to individual Member States. As of March 2015, the United Kingdom, the Netherlands, and Denmark were the only nations to publish sustainability criteria, although Germany and Belgium continued to debate the matter.102 Roughly 1.9 billion m103 of wood fuel (roundwood and wood chips—excluding wood residues from forest processing, black liquor, or recovered wood waste) have been produced annually in recent years, with only small annual increases. Most wood fuel is produced in the Asia-Pacific region (41%) and Africa (35%), with minor shares produced in Latin America, Europe, and North America.104 Charcoal is used for cooking in many countries and by industries such as steel in Brazil.105 (RSee Reference Table R21.) Charcoal production has increased roughly 9% since 2009. Africa accounts for the bulk of production (61%) and is the only region where production is increasing in both absolute and relative terms.106 Increased use of charcoal for more-traditional applications is due largely to the removal of subsidies for liquefied petroleum gas (LPG), which has made charcoal a more cost-competitive fuel in Nigeria, for example.107 In 2014, global production of wood pellets rose by 9% to just over 24 million tonnes, continuing a strong upwards trend.108 (p See Figure 10.) The main wood pellet-producing regions continued to be Europe (roughly 62%) and North America (roughly 34%). The top national producers were the United States (26% of total production), Germany (10%), Canada (8%), Sweden (6%), and Latvia (5%).109 The United States had an estimated 184 plants producing wood pellets in 2014.110 Enviva LP, German Pellets GmbH, and Biomass Secure Power Inc. have the most wood pellet production capacity in the country, although many smaller companies exist as well.111 In Europe, the major operators of solid biomass power plants include the Drax Group plc (UK), UPM/Pohjolan Volma Oy (Finland), E.ON (Germany), Fortum (Finland), and Vattenfall (Sweden).112 Torrefaction, which is a thermochemical treatment of biomass that provides a product of a better fuel quality, also saw some expansion in 2014. Solvay and New Biomass Energy (NBE) launched a joint venture to expand a Mississippi plant that was built and developed by NBE, with the goal of tripling the plant’s production to 250,000 tonnes per year.113 Liquid Biofuels Industry Global investment in biofuels production capacity continued to fall in 2014, down 8% from 2013 and reaching a near 10-year low of USD 5.1 billion. Manufacturing capacity increases have slowed in key markets, including Brazil, Europe, and the United States. However, investment in biofuels in developing countries (mostly China) grew 23% in 2014.114 Global prices of most key biofuel feedstocks declined in 2014.115 (p See Figure 11.) Relative to 2013, global prices fell for corn (down 26%), soybean oil (-14%), palm oil (-4%), and sugar (-4%); the exception was coconut oil.116 Feedstock generally accounts for around 70% of production costs, with processing, transportation, and other costs making up the remainder.117 Therefore, declining feedstock prices helped industry by reducing overall production costs. In 2014, most fuel ethanol was produced from sugar crops (roughly 61%), with the remainder from grains (roughly 39%).118 Feedstocks vary significantly depending on the country or region. For example, fuel ethanol production in the United States is based largely on corn, whereas Brazil relies primarily on sugar crops, and China on sweet sorghum, cassava, and other non- grain crops.119 In the United States during 2014, corn production surpassed 378 million tonnes (14 billion bushels) for the first time, helping to bolster US ethanol production.120 In Brazil, sugarcane harvests recovered somewhat from a drought-induced drop in production in 2013, rising by roughly 3% in 2014.121 However, informal temporary mandates in place in 2014 (and subsequently revoked) placed a cap on retail fuel pump prices, which had a negative impact on the industry because the price that could be charged for fuel ethanol did not match the costs of sugarcane production, leading 12 (out of a total of 370) Brazilian sugar mills to halt production.122 Sugar crop supply constraints and competition for the crop from chemical and beverage industries suppressed fuel ethanol production in a number of countries, such as Malawi.123 India prohibits the use of refined sugar for ethanol production, relying instead on molasses, a byproduct of sugar manufacturing. Therefore, even a surplus of refined sugar during 2014 could not compensate for the country’s shortage of sugar cane for ethanol production.124 In Thailand, tight supplies of molasses have meant that cassava is being used increasingly as a feedstock.125 Some of the major players in the global ethanol industry in 2014 included: US producer Archer Daniels Midland (ADM), which owns the five largest ethanol mills in the world and has a total production capacity of 5 billion litres per year; Novozymes (Denmark),whichprovidesenzymesforabout60%ofglobalcorn ethanol production; DuPont, which has most of the remaining market; and Odebrecht Agroindustrial (Brazil), Abengoa Bioenergy (Spain), and Henan Tianguan Group (China).126 Global biodiesel production is based largely on vegetable oils, mostly from rapeseed (Europe) and soybeans (United States, Brazil, Argentina), with smaller shares from palm (Indonesia) and other sources such as jatropha and coconut.127 Biodiesel production also includes industrial by-products such as used cooking oils (the main feedstock in China) and animal fat. In Europe, the relative share of cooking oil and tallow in biodiesel production is increasing as EU policy allows these feedstocks to be double-counted in transportation targets.128

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