Bio-coal market study: Macro and micro environmental

factors in the bio-coal sector in Finland

Lei Wang

15.02.201315.02.2013

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Main thesis: Background study and macro & micro factors

Background of the study

Definitions

Current state of the bio-coal business in Finland

Micro and macro environmental drivers for bio-coal in

Finland

SWOT summary and conclusion

GENERAL INFORMATION

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Sustainable energy solutions should embody economic, social and environmental issues, and

meet the present energy needs without compromising the ability of future generations to

meet their own energy needs.

Share of wood-based bio-energy to Finnish total energy consumption: 20% (85TWh) =>

30% (99TWh) by 2020

Little attention has been paid to the Finnish wood-based bio-coal product and market.

Background of the study

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The general purpose is to identify the current situation of the

Finnish bio-coal sector, and outline a comprehensive picture of

the macro and micro business environments related to bio-coal

in Finland, as well as use a SWOT analysis to suggest guidelines

and hypotheses regarding what the Finnish bio-coal business

market should improve for future.

Purpose of the study

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charcoal, bio-char, char, torrefied wood, torrefied pellets, green coal,

black chips, black pellets

puuhiili, grillihiili, TOPpelletti, torefiointi / paahdettu biomassa,

biohiilipelletti, and Biocarbon.

bio-coal has been defined as an umbrella concept which covers all

solid thermally degraded biomass products produced in the

process of pyrolysis, including torrefaction and hydrothermal

carbonization with different features and applications.

Key definitions

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The tri-dimensional approach

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Current state of bio-coal business in Finland

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On a non-industrial scale, bio-coal is a seasonal commodity used for

grilling and barbequing

bio-char and distillates as a growth enhancer for plants, activated

carbon to remove pollutants (purification), soil improver and a by-

product application in odour prevention

neither an industrial demand to market bio-coal in Finland, nor a

clear price tag on bio-coal

The first bio-coal production plant in Finland is to be built in Ristiina

in 2015 on a total budget of EUR 30-40M, and a planned production

capacity of 200,000 t/a

Current state of bio-coal business in Finland

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Policies related to bio-coal Finland's National renewable energy action plan plays a key role in

the bio-coal sector and sets the baseline for its development

energy taxation

tax relief

production and investment subsidies

funding for R&D

and incentives for production and end-uses

but, tax rebates, investment incentives and production incentives are

unclear in this sector, and lack specific support for bio-coal end-

users.

Macro and micro environmental factors

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Economic and social environment to bio-coal the traditional energy sector is highly dependent on imported energy

the traditional energy sector is highly concentrated

the Finnish energy industry owns a variety of energy sources

non-viable bio-coal economic feasibility (350-450€/t [40-50

€/MWh])

Enhances regional policy, employment and energy security

significantly, because its activities evolve around local resources and

value addition, leading to diversified local economic development.

The bio-coal sector apparently falls into the needs of

constructing the bio-economy (50.75 bn€, 13.5%)

Macro and micro environmental factors

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Environmental factors for bio-coal the renewable energy sector could produce of emission

reductions equivalent to 4-5 Mtons of CO2 in 2010, and

contribute 25-30% of its national reduction target in total by

2020

Bio-coal and other by-products produced in Finland are

considered CO2 neutral

Bio-coal contains superior environmental credentials

compared to wood chips and pellets, such as calorific

value, energy density, moisture content and degradability

Macro and micro environmental factors

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Technical factors for bio-coal harvesting of biomass, chipping, transportation, refining, and

conversion

The use of bio-coal will substantially increase the potential

ratio of co-firing in standard coal-fired power plants (up to

100% in comparison to about 10% based on wood pellets)

Macro and micro environmental factors

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Potential demand for bio-coal coal-fired power plants (The potential market size of

replacing coal with biomass fuels in Finland will be

about 7-8 TWh/annually)

district heating (CHPs) (more than half the fuel

consumed in district heating can be replaced by bio-

coal, about 30,000GWh/annually)

small-scale use. (250,000 small-scale central housing

heating systems ; 300,000 oil-heated single-family

houses)

Macro and micro environmental factors

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Secured biomass supply Environmental friendliness Supportive policies.

The entrance requirement for the bio-coal business is relatively low,

“early birds” with foresight will win out Sufficient funds or investment for the launching periods of bio-coal

projects.

SWOT

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As an entirely new business bio-coal does not have a clear development model

- little market information available

- non-viable economic structure

- distribution channels which are not yet available.

We would like to advise Finnish companies to work out the cost structure, profit

feasibility of the bio-coal business and construct a practicable and sustainable

biomass supply system

SWOT

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Opportunities of the Finnish bio-coal sector come along with the national

sustainability development policies and construction of a bio-economy.

We would suggest that they focus on decentralised local economic sales, biomass

supply and energy end use

SWOT

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Competition with fossil coal and other wood-based bio-fuels.

Improving its competitiveness requires cooperation and

integration along the whole supply chain.

co-firing bio-coal with fossil coal and other bio-fuels can be

a perfect point at which to introduce bio-coal to the market

with the current energy consumption technology and

market structure

SWOT

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THANKS!