PROBIOGAS EIE/04/117/S07.38588

An EIE/Altener project

Co-funded by the EU Commission

National Assessment Report

Assessment of a Centralised co-digestion Plant

hypothetically sited in Sprimont, Walloon Region

Belgium

June 2007

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Authors:

Fabienne Rabier, Gaelle WarnantWalloon Agricultural Research Centre, Belgium

Kurt Hjort-GregersenDanish Research Institute of Food Economics

Henrik B. MøllerDanish Institute of Agricultural Sciences

Sven G. SommerDanish Institute of Agricultural Sciences

Torkild BirkmoseDanish Agricultural Advisory Service

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Outline

1. Introduction

2. Case description

3. Technical description of the plant

4. Biomass resources, mass balances and methane yields

5. Agricultural and nutrient effects

6. Effect on green house gas emissions

7. Economic performance of the plant

8. Socioeconomic analysis

9. Conclusions

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Preface

Because the assessment is based on models developed under Danish circumstances, results can not be regarded as an adequate feasibility study ready for decision.

Although calculations are based on real data collected in Belgium (quantity and type of biomass, price of energy) some aspects have been estimated using Danish preconditions: costs of invest-ments, technology used in the plant, reduction of nitrogen leakage. The results have to be used care-fully knowing the specifics preconditions used for the study and not as constant figures that could be transposed directly to other studies. For more information about the results you are invited to contact the Belgian national partner (Gaëlle Warnant, warnant@valbiom.be) or the coordinator of the project (Teodorita Al Seadi, tas@bio.sdu.dk).

Conclusion

The profitability of the Belgian plant (as it was studied) is not achieved even when externalities aretaken into account. These ones were estimated during this study to a global value of 532 000 €/year (included all effects).Nevertheless, the extern effects are not sufficient to overcome the deficit. This is mainly due to limits of the case studied:

- very little heat is used, - low interest of the food industries which leads to a lack of good quality biomass to feed

the digester (low methane potential), - long distances betweens farms, food industries and plant and thus high transportation

costs.

It is also important to mention facts which could change the economic results of the Belgian case. First the evolution inside the energy sector, since the beginning of the study, prices for electricityand heat have increased (+ 15-20%). Secondly, as the minimum price of 65 €/green certificate has been chosen for the present study, the use of the market price (about 92 €/GC) could also have a great impact on the profitability.

Through the 6 case studies, the Probiogas project has shown the pre-conditions necessary to reach profitability. It is thus important to process biomass of good quality in the plant in order to get higher methane yield (promote the treatment of waste from industries by biomethanation), to in-crease the price for the electricity (the price of 0,07 €/kW found in many countries is, for sure, notsufficient to support the production) and to promote the use of the heat (district heating, utilisation by industries).

In Belgium it is important to promote the processing of food industries waste in CAD plants and to develop the possibilities for using the heat. It is also important to propose solutions to remove the non technical barrier as mentioned in the report.

Gaëlle Warnant and Fabienne Rabier, Walloon Agricultural Research Centre, Belgium

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1. Introduction

The PROBIOGAS project is an EIE/ALTENER project co-funded by the EU Commission. The objective of ALTENER projects is to stimulate heat and electricity production from biomass in EU countries. Within this general frame, the aim of PROBIOGAS is to asses the economic, environ-mental and energy aspects of the biogas production by centralised co-digestion in selected areas of six EU countries. The assessment will provide incentives for the implementation of biogas systems in those areas and will help identify and remove the existing non technical barriers.

The EU countries targeted by this project are: The Netherlands, Belgium, France, Ireland, Spain and Greece. In each of the countries a specific case was chosen as case study for the assessment. For each case a livestock intensive area was selected in order to have favorable preconditions for an-aerobic digestion.

In the particular case of Belgium, the villages of Sprimont and Bilstain in the Walloon Region were chosen as the case for assessment by the Belgian partner, Walloon Agricultural Research Center (CRA-W), who is also co-author of this report.

At the beginning of the PROBIOGAS project period, an introductory seminar was held in each one of the EU countries mentioned above. In Belgium, the seminar was held in Namur on the 30th of May 2005. Invited to the introductory seminars were farmers, companies, organisations and authori-ties that would eventually be involved in the realization of a co-digestion plant. The intention of the seminar was to form a project net-work of parties involved under chairmanship of the CRA-W, si-multaneously being the target for the dissemination of the project results.

The main activity of the project is the assessment of a centralised co-digestion plant, hypotheticallysited in a livestock intensive Walloon region. In other words, the assessments do not concern an existing plant.

The present assessments have been carried out by a group of Danish experts, based on experience from more than 10 years of technology development of co-digestion plants. The assessment is based on data and information specifically collected from the selected case, by the national partner CRA-W in cooperation with the above mentioned network.

Energy production and economic performance in general have been assessed, how farmers are af-fected, and changes in nutrient utilisation and green house gas emissions are estimated. By the application of socio economic methods derived benefits are taken into account and a basis for an overall evaluation of such a project from the society point of view is found. Questions like, is it economic? Do farmers benefit? Is it beneficial to the environment? Is it generally a good idea? All this can be concluded from the results. Results from this analysis can be used in governmental strategic considerations about which measures should be implemented for example in future energy planning and green house gas emission reduction policies. The corporate economic analyses (chap-ter 7) differs from the socio-economic analyses (chapter 8), therefore results from these 2 methods have to be considered independently.

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Further more, based on the information collected in each country by a questionnaire, the assessment describes the main incentives and non-technical barriers for the implementation and development of biogas from centralised co-digestion in the studied areas and to propose some solutions for their removal.

However, the assessments are based on models developed under Danish circumstances, and results can not be regarded as an adequate feasibility study ready for decision. Assessments in PROBIO-GAS must be followed by detailed technical, economical and organisational planning before the construction phase is eventually initiated.

Furthermore, as PROBIOGAS is a dissemination project, it should be emphasized that the methods and model used are not exhaustively explained or demonstrated in the report. Calculations are not shown in every detail, as the focus of the PROBIOGAS project is on the results and the physical, economic, administrative and regulatory preconditions for CAD plants in Belgium.

It is hoped that this assessment report will be used as inspiration for the work and motivate nationalauthorities to remove barriers for co-digestion in Belgium.

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2. Case description

Sprimont anaerobic digester, introductory comments

For the Belgian case study, 2 projects within the same region are presently studied 1) Project of the town of BILSTAIN 2) Project of the town of SPRIMONT

We choose to merge the 2 cases and pool the data concerning the feedstock processing at the di-gester. The small town of Sprimont is the chosen site for the plant.

General location of the site

The chosen area in the Belgian case is located in the Province de Liège one of the 5 Provinces of the Walloon part of Belgium (Northeast of Wallonia) (see figure 2.1).

Figure 2.1: Walloon part of Belgium and its provinces

General aspects of the area

• Soil & subsoil type:

Siltys soil with more than 15% coarse elements (>2 mm). Good draining Cambic horizon

• Population density Town Sprimont: 172,5 inhabitant /km² Town Limbourg (Bilstain): 227, 8 inhabitant /km²

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[Comparing to population density of the Province Liège: 267,7 inhabitant /km²]

• Road networkRoad network is dense: the whole region is well served by roads and transportation network:

- Access to highway are close to the town: Sprimont has a direct access to the main North-South road (Liège-Luxemboug E25): the access to the main East-West road (Aachen-Liège E40)and interchange of Liège is 25 km far from Sprimont,

- Main roads, and local roads are in good conditions- Small roads between farms are narrow and more winding but in good condition.

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Figure 2.2: road network in the Region of Pays de Herve (East of Wallonia)

• Main activities

- Agriculture: cattle breeding for milk production, some pig and poultry breeding, grassland, arable crops, orchards.

- Small and medium size food industries: cheese production, dairy products, fruit processing factories (syrup, cider), meat processing factories and small firms making regional special-ties (family firm)

- Industry: previously the region had an important mining activity (coal mines) but all the coalmines were closed. Now the main industries are located in the outskirts of Liège and along the river Meuse.

The area of the site: Potential/ material to be processed

Agriculture The chosen area is specialised in milk production with more than 35000 cattle. Additionally, some big pigs and poultry breeders are also located in this area.

40 farms are included in the Belgium project: 20 in the Commune of Sprimont and 20 in the com-mune of Limbourg. The average size of the farms is 55,2 ha which is larger than the average ob-served in Wallonia (44,1 ha).

The total agricultural area where the manure is spread is about 2 200 ha. The main crops in this area are fodder crops as maize and grass. Within the 40 farms studied agricultural land distribution is:

----- Borders of communes

__ Highways, __ Regional roads, � Access to highway (interchange),

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• 88,6 %: grass • 8,5%: maize • 2,9%: winter wheat

Agricultural effluents to be processed

The following tables summarized the quantity of agricultural manure which can be collected among the 40 farms. The manure will not require processing before digestion.

Table 2.1 Liquid manure collected from farms (m³/year)

Animal type Liquid manure [m³/year] % DM

Dairy cattle 43 236 7.1 Pigs 8 056 10.2

Table 2.2 Solid manure collected from farms (tonne/year)

Animal type Solid manure [T/year] % DM

Cattle 4 651 27.8 Horses 180 27.8 Broilers 2 268 55

Energy crops potentially processed

Table 2.3 Energy crops collected from farms (tonne/year)

Energy crop type Amount [T/year] % DM

Corn 1 922 30 Grass silage 885 30

Agro-food industries

Main production of the region: dairy products (milk transformation, butter, cream); cheese produc-tion; fruits processing (syrup, jelly, cider), cereals and starch transformation.

41 industries were listed within the zone but only 22 could have by-products suitable for anaerobic digestion. 11 replied to the questionnaire. Wastes that are taken into account come from 7 indus-tries. Waste products with dry matter < 2% have been excluded from the biomass input. No by-product or organic waste will require processing before digestion.

Table 2.4 Identified by-products taken into account for the case study

Type of organic waste Amount (T or m³/year) Dry Matter (%)

Waste water from milk industry 800 tonnes 6 Waste water from cheese indus-try

5 430 m³ 7

Lactoserum from cheese in-dustry

8 000 m³ 5

Fruit pulp 1 220 tonnes 30 Appel pulp (from cider factory) 200 tonnes 7 Fruit pits 150 tonnes 85 Strachy products 800 tonnes 7

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Very few industries are interested in a biogas project because: - cost for present waste treatment are not very high;- a big part of the waste is used to feed animals (paid by farmers); - the cheese industry runs a project for anaerobic digestion of the lactoserum but only on an

individual scale (just the industry alone) and is not interested in co-digestion with other products.

Figure 2.3: Localisation of farms and food industries studied in the case

The biogas plant: By-products produced

Biogas productionThe proposed use for biogas: Conversion to heat and electricity (CHP)

From the feasibility study of the project, distribution of methane yield is: - Energy losses: approx. 15%

- Electricity: approx. 35%

• self-consumption: 3.5% • injected to the grid: 31.5%

For the electricity injected to the grid, the average price for electricity sale is 25 EUR/ MWh. - Heat: approx. 50%

• self-consumption by the plant: 20% (for sanitation and heating the digester) • other heat users: approx. 30%

• Farms • Food industries • Potential site for biogas plant

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They are several potential users of the heat: - local museum - sports hall - school - communal buildings - greenhouses - senior home

Different scenarios are still studied: 1) heating all the potential buildings require 3 separated district heating systems 2) heating greenhouses and sports hall require one district heating system

For heat sales the average price is 30 EUR/MWh but it varies strongly depending on the case.

Other financial gains should be obtained by the Green Certificates that the biogas unit could get. The calculation of the number of the Green Certificates is made by the Walloon Commission for Energy.

Digested manure

Liquid and solid fraction will not be separated. The digestate will be used on grassland and arable crops as a fertiliser. The amount of digestate will be divided relatively between the farms who sup-ply the digester with farm effluents.

Farmers using digestate from co-digestion need a special licence, and analysis of digestate have to be regularly carried out by a registered laboratory. Costs of analysis will be charged to the farmers.

Transportation

The digestate will be returned to the farms on the same trip as manure is collected. The vehicles used for transportation for each purpose would be farm trucks, trailers or tankers. In economic as-sessments however, trucks with 30 tonnes load are used, as large capacity is crucial in minimising transport costs.

The food industries are situated within a 40 km radius of the site. The most distant is 37 km away from the chosen site, but the average distance is 25 km.

Table 2.5 Transport distances

Average distance (km)

Distance farms to unit Distance food industries to unit Sprimont site 15,6 25

Brief description of development process involved and ownership

Two small projects of agricultural biogas units are located in the region of Pays de Herve, in Bil-

stain and in Sprimont. Both were initiated by farmers interested in better manure management in terms of storage capacity and quality as many farms are old, and storage capacity and tanks are not adapted or in conformity with the new legislation (6 month capacity storage.)

Project of Sprimont: the idea came up in 2003 after discussions between farmers and a private media company (EVF). A meeting to inform the farmers about biogas production was held in the

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commune. 24 farmers took part in the meeting and showed some interest for this project. As it was first planned to process only agricultural manure, no food industry was contacted. Other meetings were held to collect data from farmers but also to convince local authorities who were afraid of traffic nuisance of the cartage.

A pre-feasibility study was carried out by the “biomethanation facilitator” of the Walloon Region, ensuring a total support of local authorities. In 2004, as the pre-feasibility study expressed favour-able opinion about the project, a feasibility study was ordered to a consultancy agency. The latest assessment and study (2006) showed that the profitability could not be reached in its present form.

Project of Bilstain: the first step was taken in 2004 at a conference held in the town about renew-able energies and opportunities of diversification for agriculture. The “biomethanation facilitator” presented the concept of anaerobic digestion (AD). A visit in Luxembourg was organised to see a biogas plant processing agricultural wastes. Farmers of the town as well as local authorities were enthusiastic and after several meetings 8 farmers decided to set up a society with unlimited respon-sibilities. The idea was to keep the size of the project as small as possible without including food industries in order to avoid an environmental impact assessment. [This kind of study is compulsory for unit treating more than 50 tonne/day in inhabited areas and for unit treating more than 100 tonne/day in other zone]. As for Sprimont the pre-feasibility study supported by the Region (with facilitator intervention) pointed out a favourable opinion.

In 2005 the farmers formed a society with unlimited responsibilities which paid for the feasibility study. This study is still in progress.

For both projects it is planned that the unit would be managed by farmers through a cooperative of manure management. The unit would belong to farmers, private companies and regional authorities. In both cases different aspects like processing by-products from food industries and energy crops have to be taken into account as well as externalities.

Considering the potential of manure, the number of food industries in the area and the motivation of farmers and local authorities we decided to choose both projects, collect the data from the two of them and merge them to ensure sufficient amount of manure in one single unit, and also to include wastes from food-industries that were located in the area.

Nevertheless the feasibility study of the Sprimont unit has shown that the project would not be prof-itable within a reasonable time. New assessments in the PROBIOGAS project may change that con-clusion.

Farming issues

• Storage requirement regulation: 6 months capacity storage from 1 January 2007. • Implementation of Directive 91/676/EEC on nitrates from agricultural sources • The area is partly classified as “vulnerable zone” where special measures for fertilisers ap-

plication are applied. Sprimont is just on the boundary of this region and none of the farms in the project is in the vulnerable zone.

A sustainable management of nitrogen program is implemented. Amount and time for fertilisa-tion are regulated according to this program.

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Table 2.6 Permitted organic N application on different land types

Amount of organic N Grassland Arable land Normal zone 210 kg /ha 120 kg/ha Vulnerable zone 210 kg/ha 80 kg/ha

Table 2.7 Prohibited periods of fertilisation

Period when fertilisation is prohibited (depending on the type of manure and soil cover) Fast fertilising effect (slurry, poultry drop-

pings) Slow fertilising effect (solid manure, compost)

Arable crops

From October to February

From July to September except if: - winter cereals - crops trapping nitrogen - straw incorporation

From July to September except if: - winter cereals - crops trapping nitrogen - straw incorporation

Grassland From September to November

• If wastes or other biomass external to the farms are to be processed into the digester, all the farmers need special authorisations from the Walloon Office of wastes A comprehensive analysis of soil must be carried out before digestate could be first spread on land: % organic matter, minerals, heavy metals. Cost of soil analysis: 2 000 EUR

• Analyses of the digestate must be carried out twice a year: 1000 EUR /analysis

Regulatory environment

National & EU Regulations to be met • Licences/permissions to be obtained: planning permission from regional authorities (General

Direction of Land Planning): The unit site is located in a zone of economic or industrial ac-tivity (formerly a quarry site)

• Waste license from Walloon Office of Wastes if products from food industries are processed • Licence to generate green energy and obtain Green certificates (from Walloon Commission

for Energy -CWAPE)

Other issues related to CAD or area

Energy policies: in Belgium the Green Certificate System is applied in order to support the produc-tion of “green electricity”.

A Green Certificate is a transferable certificate issued to producers of green power for a number of kWh generated which is equal to MWh divided by the carbon dioxide saving rate. The carbon dioxide saving rate is calculated by dividing the carbon dioxide gain achieved by the system under consideration by the carbon dioxide emissions of the traditional reference electric system (steam and gas turbine), the emissions of which are defined and published annually by the Walloon Commission for Energy. This carbon dioxide saving rate is limited to 1 for generation units producing over 5 MW, and 2 below that limit.

The carbon dioxide emissions are those generated by the green power generation as a whole and include fuel production, emissions during combustion if applicable, and waste processing if appli-

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cable. In the case of centralised co-digestion transportation of external wastes or fuel consumption for energy crops are taken into account and penalize the profit making of the biogas unit (less Green Certificates are obtained).

The system poses higher risk for investors and long-term, high cost technologies (as biogas plant) are not easily developed under such a scheme. However new decisions have just been taken to fa-vour biomethanation projects in the agricultural sector as for biogas projects the price of Green

Certificates will be guaranteed at a minimum price of 65 EUR/GC for a period of 15 years

(instead of 10 years).

At present (first period of 2006) the average value is 90 EUR/GC (end of 2005) but it should dimin-ish in the future (around 80 EUR/GC).

The costs of the connection on the electricity grid are very high and are totally in charge of the owner of the plant: around 25 000 to 50 000 EUR (medium voltage) for a farm unit.

Support available

Financial support measures available

Different sources can be solicited for the biomethanation project but some subsidies depend on the status that the project initiators will adopt. � the first pre-feasibility study carried out by facilitator is free � a grant from the regional authorities for consultancy: maximum 75% of the consultancy fee

(with a maximum of 12 500 EUR subsidies) � Tax exemption on real estate (property) tax

Special case (depending on owners/shareholders) • If local authorities are among the owners the Commune can apply for special financial sup-

port (investment in renewable energies for public buildings) • If project managers are private firms or with a commercial activity • If project managers form an agricultural cooperative, subsidies from Walloon authorities (di-

rection of Agriculture) are available following some conditions. There are 3 different kinds of financial support: 1) Subsidies on the interest rate on investment or loan (5% maximum), the rest of interest rate in charge of the borrowers is around 3%. 2) Public guarantee 3) Subsidies on capital if farmers do not call for a loan.

Tax deductions on investment for energy savings for industrial, commercial or agricultural compa-nies: Tax deduction can reach 40% and can be applied for “energy audit” and CHP systems.

Most of the subsidies or financial support programs can not be drawn concurrently and depends on the status of the projects managers. For Sprimont, the farmers have formed an agricultural coopera-tive and would usually receive financial supports from private and public participation. At the pre-sent time there are a lot of uncertain issues and nothing has been awarded.

• Agencies, representative associations, supportive of/assisting the project: “biomethana-tion facilitator”, local authorities, FWA (Walloon union of farmers), ValBiom, private part-ners, some of the TGN members (consultancy agency, etc).

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Public relations

The project has been initiated by local farmers. The mayor of the town and the local authorities, have supported the project from the beginning.

Citizens of Sprimont have heard about the project and they have shown no reluctance until now. Nevertheless the biogas plant project has not been explained yet to the local population and they have not been consulted yet. A “neighbourhood survey” must be carried out before the construction of the plant (once planning permission is obtained). Some people may be opposed to the project fearing that the plant would cause nuisances such as traffic of trucks, noise, odours…Stakeholders and local authorities are aware that it is necessary to inform local inhabitants of the benefits of biogas production and of the immediate consequences for them.

Agricultural papers, local television and radio will spread information about any further develop-ment of the projects.

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3. Technical description of the plant

The biomass resources in this project consist from manure and organic waste.

Table 3.1 Composition of biomass resources

Type of biomass resources Tonnes

Cattle manure 48067 Pig manure 8056 Other manure 2268 Organic waste 16600 Total 74991

Liquid manure is transported to the plant in vacuum tankers with a 30 tonnes load. Solid manures and deep litter is transported on trucks with a 20 tonnes load.

It is anticipated that organic wastes are delivered at the plant by the waste producer.

From this biomass approx. 1, 5 million m3 CH4 is produced according to the calculations presented in chapter 4.

In the CHP plant this energy is converted into electricity and heat. Electricity production, which may amount to approx. 5,5 mil kWh is sold to the grid, and heat production, which may amount to 7,9 mil kWh of which only 2,9 MWh can be sold for heating purposes.

The centralised anaerobic digestion plant will have a treatment capacity of 75000 tonnes on a yearly basis or approx 200 tonnes per day. The plant is operated at thermophillic temperatures, which means 52-55 Co and 15 days retention time. The plant is equipped with 70 Co pre sanitation step, heat exchanging, biogas cleaning facilities, odor control system, storage facility for biogas, and CHP plant (800 kwe) for heat and power production. Figure 3.1 shows a diagram of the plant

The manure and organic waste is unloaded in the unloading hall and entered into the pre storage tank. From there it is pumped to the mixing tank in which the biomass is properly stirred and the optimal composition is ensured. From the mixing tank the biomass is pumped to one of the sanita-tion tanks. It is pumped through the heat exchangers, in order to recover heat from hot, sanitized or digested manure that is simultaneously pumped out of the other sanitation tank or the digester. By this it is heated to 70 Co and kept inside the sanitation tank for one hour. After that it is pumped through the heat exchangers once again, and into the digester with a capacity of approx. 3100 m3,

where the biogas production takes place.

After 15 days in the digester, the now digested manure for the last time is pumped through the heat exchangers and into the manure storage tank. From the storage tank, the manure is loaded on to trucks and returned to storage tanks at the farms.

The biogas is cleaned in a biogas cleaning tank in a biological process and sent to the CHP plant for conversion into heat and power.

Odour emissions from the plant is controlled by sucking away air from the unloading hall, the pre storage and mixing tanks, and cleaning it in a biological odour filter.

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Diagram of CAD plant

Truck Loading &unloading

hall

Mixingtank

Manurestorage tank

Digester

Biogas storage

Technical installatons

Repair shop

CHP plant

Office

Staff room

Pre storage tank

Sanitation tanks

Odour filter

Biogas cleaningtank

Heat exchangers

Gas room

Biomass flow Biogas flow Figure 3.1 Diagram of the CAD plant. Source: P. Thygesen

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4. Biomass resources, mass balances and methane yields

The biomass resources are listed in the following table and the total mass flow and gas yield is cal-culated.

The biogas production has been calculated by using specific CH4 yield listed in appendix. The bio-gas output has been calculated by assuming that no nutrients are lost during the biogas process and 50% of the organic nitrogen is converted to NH4-N. Furthermore the dry matter (DM) and volatile solids (VS) content in the biogas output is calculated by subtracting the amount of VS converted to gas from the input by assuming that VS converted is 2 kg VS for each m3 CH4 produced from ma-nure and non fatty wastes and 1 kg of VS for each m3 CH4 of fat rich wastes.

Table 4.1 Categories, amount types and gas yield from different biomass

Biomass Type Amount DM DM VS CH4 yield

tonne year-1

g/kg kg year-1

Kg year-1

nm3 CH4 year

-1

Cattle Slurry 43236 71 3069756 2455805 491161Deep litter 4651 278 1292978 1034382 155157

Pig Slurry 8056 102 821712 657370 197211Cattle total Total 47887 4362734 3490187 646318Other animals:

Horses

Laying hens

Deep liter

Deep liter

180 2268

300 550

54000 1247400

43200 997920

8640349272

Waste Total 16600 1391600 1113280 328824Manure and waste

excl. crops

Total 74991 7877446 6301957 1530265

Energy crops 3000 300 900000 720000 252000

In figure 4.1 input and output are given and in appendix the assumptions for the calculations are given. Some of the waste products are very low in DM and waste products with DM<2% have been excluded from the biomass. The level of NH3 (TAN) is quite low in the digested biomass (2,3 g/l). This low level is mainly caused by the waste streams which is quite low in nitrogen. The low level of NH3, means that there is no process problems concerns about a thermophilic digestion.

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Figure 4.1. Biomass input/output and key process figures

Including energy crops like maize in the biomass might be of interest, while this will increase the gas yield significantly (fig. 4.3), but only a situation without energy crops is included in the analy-sis. The reason for excluding the energy crops is that the model used is not able to handle energy crops in terms of environmental aspects effect on greenhouse gas emission etc. It is advised that more high yielding wastes should be included (fatty wastes) if possible, in order to increase biogas production.

Figure 4.2. Methane yields from biomass without energy crops

0

200.000

400.000

600.000

800.000

1.000.000

1.200.000

1.400.000

1.600.000

1.800.000

Belgium

Nm

3 C

H4

/ye

ar

Waste Total

Broilers Total

Pig Total

Cattle and

horses Total

Biogasinput total Manure

74991 tonnes/year 58391 tonnes/year

7877446 kg TS/year 6485846 kg TS/year

6301957 kg VS/year 5188677 kg VS/year

248525 kg N/year 205726 kg N/year

94941 kg NH4/year 88436 kg NH4/year

178438 kg P/year 161473 kg P/year

347249 kg K/year 333219 kg K/year

Pretank Biogas

10,5 %DM 1530265 Nm3 CH4

Biogasoutput

74991 tonnes/year

3404330 kg TS/year

3404330 kg VS/year

248525 kg N/year

171733 kg NH4/year

178438 kg P/year

347249 kg K/year

Key proces figures

20 m3 CH4/tonnes

3,3 g total N/l (dig. Efl.)

2,3 g TAN/l (dig. Efl.)

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Figure 4.3 Methane yields from biomass with energy crops

0

200.000

400.000

600.000

800.000

1.000.000

1.200.000

1.400.000

1.600.000

1.800.000

2.000.000

Belgium (incl. energycrops)

Nm

3 C

H4/y

ear

Energycrops

Waste

Broilers Total

Pig Total

Cattle and

horses Total

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5. Agricultural and nutrient effects

According to common sense and good agricultural practice, manure must be utilised as a fertiliser on the fields. Digestion of manure in a biogas plant has a substantial effect on the fertiliser value of the manure. The composition and the fertiliser effect of digested slurry is changed compared to the untreated pig or cattle manure the farmers normally use in the fields. There are at least three reasons for that:

1. At the biogas plant pig slurry, cattle slurry and solid manure are mixed 2. A substantial amount of industrial waste is added3. Organic material (including organic nitrogen) is broken down in the biogas process, and the

amount of plant available nitrogen (ammonium) is increased.

These changes must be considered when making fertiliser plans on the farms receiving digested slurry from the biogas plant. If doing so, a significant saving on buying mineral fertiliser can be realized, as well as a reduction in the negative impact on the environment.

Method

For all farms delivering manure to the biogas plant, the area of each crop is summarized and the total demand of nitrogen, phosphorus and potassium is calculated according to the general fertiliser recommendations in the area. The need for purchase of mineral fertilisers are calculated by subtract-ing the actual fertiliser value of the manure spread in the area.

The farms delivering manure to the biogas plant get the same quantity of digested slurry as the amount of untreated manure that was delivered to the biogas plant.

The surplus manure is "exported" to plant production farms in the area. On these farms industrial waste products suitable for land spreading are also used. The need for purchasing of mineral fertil-iser is also calculated for the plant production area. Without a biogas plant the amount of mineral fertiliser is relatively large, because the amount of organic fertiliser (manure and organic waste) islimited. With a biogas plant, the amount of mineral fertiliser is smaller, because a larger amount of organic fertiliser (digested slurry) is applied.

The needed area to receive surplus manure is calculated from the situation with a biogas plant, but the size of the area is the same whether with or without a biogas plant. The size is calculated by assuming that a full utilisation of phosphorus in the surplus manure can be obtained.

The fertiliser effect of nitrogen in manure, industrial waste and digested slurry is assumed to be a full utilisation of ammonium. In practice this is a relatively high fertiliser effect and can only be obtained by an optimal use, according to spreading time, spreading method etc. This will usually require a storage capacity of 6-9 month.

Main results

In total on the farms with animal production and the arable farms about 82,000 EUR can be saved in mineral fertiliser, which is equivalent to 27 EUR per hectare. The highest saving is on arable farms with a saving of 81 EUR per hectare. On the animal production farms only 9 EUR can be saved. A condition for the saving is that the plant production farms are willing to receive digested manure and use that in stead of mineral fertiliser. The animal production farm will have to spend a

23

little more in buying phosphorus and potassium in mineral fertiliser, as the concentration in the di-gested manure in average is lower than in untreated manure.

Table 5.1 Manure and fertiliser application

Today - untreated

slurry

Area with a biogas

plant

Farms with manure to biogas plant Amount Area Amount Area Total area with crops, hectare 2,208 2,208Amount of manure collected, tonnes 58,391 58,391 Amount of manure spread in the area, tonnes 52,791 52,791 Amount of waste spread in the area, tonnes 0 0 Amount of manure out of area, tonnes 5,600 22,200 Mineral fertiliser, tonnes 2,253 2,133 Mineral fertiliser, EUR 369,725 352,835 Mineral fertiliser, kg N 563,297 533,269 Mineral fertiliser, kg P2O5 2,583 4,848 Mineral fertiliser, kg K2O 11,820 16,984 Area to receive surplus waste and digested slurry Necessary area, hectare 812 812Received untreated waste, tonnes 0 0 Received untreated/digested slurry, tonnes 5,600 22,200 Saved mineral fertiliser, tonnes 171 Saved mineral fertiliser, EUR 65,569 Saved mineral fertiliser, kg N 42,657 Saved mineral fertiliser, kg P2O5 37,293 Saved mineral fertiliser, kg K2O 70,485

Savings in mineral fertiliser Savings in mineral fertiliser, total, EUR 82,459 Saved per hectare, EUR 27

24

6. Effect on green house gas emissions

Environmental hazards that may be related to animal manure management are greenhouse gas emis-sion, ammonia emission, odour and nitrate leaching. Green House Gases (GHG) can be efficiently reduced by processing manure in a biogas plant. Studies have shown that ammonia emission may be higher during storage of fermented slurry but that simple covers can mitigate that problem (Sommer 1997). Ammonia emission from applied slurry is not affected by fermentation of the slurry (Rubæk et al. 1996). Odour may be reduced by biogas production especially if the biogas plant is properly built and emission of gases from the plant reduced with air filters etc. Leaching and erosion losses of nitrogen and phosphorous can be reduced due to more efficient use of nitrogen in manure and a better distribution and use of manure plant nutrients.

In this project the objective is to assess the direct effects of the biogas treatment on environmentalhazards related to livestock farming, and the direct effect are primarily on the emission of the greenhouse gas methane. The effect of biogas production on methane are high (Sommer et al. 2004) and we have models that can be used globally to assess this effect. For the,moment we do not have the necessary information available for ammonia and odor emission, nutrient losses and models needed to give an acceptable estimate of the effect of the introduction of biogas production in the manure treatment are also lacking.

Methane emission from animal manure

Methane emission from animal slurry systems is calculated using the dynamic models of Sommer et al. (2004)

))/1(exp(ln))/1(exp(ln)( 21 RTEAbVSRTEAbVSTF ndd ×−××+×−××= (1)

In Eq. (1), F is the emission rate (kg CH4 d-1), b1 and b2 are rate correcting factors (no dimensions),

A is the Arrhenius parameter (kg CH tonne-1 VS h-1), E the apparent activation energy (J mol-1), Rthe gas constant (J K-1 mol-1), and T the temperature (K). The parameters used in the calculations are presented in the article of Sommer et al. (2004).

Methane emission from solid manure is calculated using the tier 2 model presented by IPCC (IPCC, 1996).

F = VS x B0 x MCF x 0.67 (2)

F is the annual emission kg CH4 year-1, B0 is the maximum methane production capacity (0.24 m3

kg VS for cattle) and MCF is the methane conversion factor typical for the climate region, which is western Europe (2 % ).

In the calculations of methane emission from the scenarios with biogas production it is assumed that the management of manure during housing and outside is not changed significantly, i.e. emptying manure from houses, duration of storage time etc., apart from having included biogas production. For solid manure assuming the manure is diluted with water and stored after biogas treatment.

The air temperature will provide a very precise estimate for slurry temperature as shown in the arti-cle of Hansen et al. (2006). Therefore, the temperature used to estimate CH4 emission from slurry stored in house is related to the air temperature in the housing systems in the regions for which there

25

is provided activity data about livestock and manure management. Ambient air temperature is used to assess the temperature of outside stored slurry.

Management of manure in animal houses and in outside manure store

In the Belgium region the most of the manure biomass is collected as cattle slurry and as cattle deep litter (Table 6.1), reflecting that a high proportion of the livestock production in the region are cattle farming. Further, there are pig slurry and poultry deep litter. Table 6.1 Belgium scenario: Amount of manure excreted by animals

Amount

(tonne/year) DM VS

tonne year-1 tonne year-1

Cattle slurry 43236 3069.8 2455.8Cattle deep litter 4651 1293.0 1034.4Horses deep liter 180 54.0 43.2Fattening pigs slurry 8056 821.7 657.4Laying hens/broilers deep litter 2268 1247.4 997.9

Slurry from pig houses is removed every 14 days and from cattle houses every 30 days. The outside cattle and pig slurry stores are emptied in early spring and in June, further a part of the slurry stored outside is removed in autumn (Figure 6.1). In this scenario the pigs are housed in forced ventilated houses and at temperature between 21 and 25oC, consequently the temperature of in house stored pig slurry is high (Figure 6.1). Outdoor stored pig slurry temperature is affected by ambient air tem-peratures and therefore ranging between 2 and 18oC. Cattle is housed in natural ventilated houses and the temperature inside is near similar to outdoor temperatures. Consequently, temperature of cattle slurry stored inside and outside is identical. It should be noticed that cattle slurry is stored in house at a much lower temperature than pig slurry stored in house.

26

Temperature - pig slurry

Day of year

0 100 200 300

Tem

pera

ture

, oC

0

5

10

15

20

25

30

Houses

Slurry stores

Cattle slurry

Day of year

0 100 200 300

Slu

rry, to

n

0

200

400

600

800

1000

1200In-housen

Outside slurry store

Pig slurry

Day of year

0 100 200 300

Accum

ula

ted s

lurr

y, VS ton

0

50

100

150

200

250 In-house

Outside slurry store

Temperature - cattle slurry

Day of year

0 100 200 300

Tem

pera

ture

, oC

0

5

10

15

20

Figure 6.1.: The temperature of stored pig slurry and storage pattern of slurry in the scenario

with and without biogas treatment of slurry.

The emission of methane from slurry stored in pig houses is due to the high indoor temperature higher than the emission from outside stored slurry (Figure 6.1). Accumulated methane emission from cattle slurry stored outside is higher than the emission from slurry stored in-house, because theslurry is stored outside for much longer periods than inside. The total emission of methane per kg VS from cattle slurry is lower than the emission from stored pig slurry due to the low temperature of the slurry stored inside in the natural ventilated cattle houses.

Pig slurry: Methane emission

Day of year

0 100 200 300

CH

4 e

missio

n, kg

0

10x103

20x103

30x103

40x103

50x103

Pig houses

Outside slurry stores

Total

Cattle slurry: Methane emission

Day of year

0 100 200 300

CH

4 e

missio

n, kg

0

10x103

20x103

30x103

40x103

50x103

Cattle houses

Outside stores

Total

Figure 6.2 . Methane emission from stored slurry in the Belgium scenario.

The emission of methane from dairy cattle slurry is reduced with 8.98 tonnes and emission from pig slurry is reduced with approx. 3.43 tonnes (Table 6.2). There is no reduction in methane emission

27

from solid manure. The reason for a higher emission from treated solid manure is that when solid manure is used for biogas production the treated manure will be stored as an anaerobic slurry, thus, although much carbon have been emitted as methane and carbondioxide during fermentation, a frac-tion of carbon will remain in digested manure and this will be emitted as methane during storage. Solid manure is stored aerobically and has a very low emission of methane, whereas anaerobically stored manure has a high methane emission potential, which in this case irrespective a lower carbon content for the digested slurry is higher than for stored solid manure.

If it is assumed that the organic waste used for biogas production more or less is stored like slurry before digestion then the processing will reduce methane emission with 5.81 tonne and with 122.00 tonnes CO2 eq. per year. The poultry manure is very dry, and there are no experimental or IPCC emission factor for methane emission from stored solid poultry manure, therefore this source is not included in the calculations.

In total biogas treatment reduces GHG emission from animal manure with 219 tonnes CO2 eq. per year and from animal manure and waste with 341 tonnes CO2 eq. per year. N2O emission reduction amounts to 507 tonnes CO2 eq. per year.

Table 6.2 Yearly emission of CH4 and N2O from the manure and waste in the Belgium

scenario

Reduction tonne

CH4 or tonne N2O

Reduction

tonne CO2eq.*

CH4: Animal manure 10.4 219

CH4: Organic waste 5.8 122N2O: Animal manure and organic waste 1.6 507

*Methane conversion factor of 21 and N2O conversion factor 310 (Derwent et al. 2002; IPCC 2001)

Results show considerable N2O reductions due to the mineralisation of nitrogen during the AD process. However the reliability of the models used for the latter is relatively poor due to the differ-ence in climate and agricultural practice between Denmark and Belgium, as they are based on Dan-ish data.

References

Derwent, R.G., Collins, WJ. And Johnson, C.E. 2002. Global warming potentials for non-CO2 green-house gases. In (eds. Van Ham, J; Baede, A.P.M.; Guicherit, R.; Williams-Jacobsen, J.G.F.M.) NON-CO2 Greenhouse gases: Scientific understanding, control options and policy aspects. Pro-ceedings of the Third International Symposium. Maastricht, The Netherlands 21-23 January 2002. Pp 345-369.

Hansen, T.L., Sommer, S.G., Gabriel, S. and Christensen, T. H. 2006. Methane production during stor-age of anaerobically digested municipal organic waste. J. Environ. Qual., 35, 830-836.

IPCC 1997. Greenhouse Gas Inventories: Reference Manual. Revised 1996 IPCC Guidelines for Na-tional Greenhouse Gas Inventories. Volume 3.

IPCC, 2001 Climate change 2001. The scientific basis. Cambridge: Cambridge University Press. Petersen SO, Nielsen TH, Frostegård Å and Olesen T (1996) Oxygen uptake, carbon metabolism,

and denitrification associated with manure hot-spots. Soil Biol. Biochem. 28: 341-349.

28

Rubæk, G.H., Henriksen, K., Petersen, J., Rasmussen, B., and Sommer, S.G. 1996. Effects of applicationtechnique and anaerobic digestion on gaseous nitrogen loss from animal slurry applied to ryegrass (Lolium perenne). J. Agric. Sci.126, 481-492.

29

7. Economic performance of the plant

General comments on economic calculations

The economic calculations are carried out as a difference analysis based on a system analysis. The system analysis contains the whole system from manure pre storage tanks on the farms to nutrients are utilised as a fertiliser in the fields. That means that all the farms connected to the CAD are in-cluded, also crop farms that are assumed to receive surplus manure in the CAD situation. So what we do is to calculate all relevant costs for the whole system, in a reference situation, and in a CAD situation, where the CAD is assumed established. When the results for the two systems are com-pared, benefits and disadvantages appear. This means that the group of manure producing farmers are looked upon as a whole, and because of that benefits for individual farmers can not be isolated.

The calculations are carried out in integrated spread sheet models based on Danish experience. In-put data have been provided by CRA-W when it comes to defining the case study and input of ma-nure and waste and sales prices for heat and electricity as well as treatment fees for the receipt of organic waste. Costs are calculated in Danish 2005 prices in the first place, and then transformed to Belgian 2005 prices, by using Comparative Price Levels from Eurostat. As the price levels were consumer prices, they were adjusted for variations in VAT. The used interest rate is 5,5 % p.a.

Basic preconditions and assumptions

Table 7.1 presents a number of important assumptions and preconditions that have been used in the calculations.

Table 7.1 Basic preconditions

Required storage capacity solid manure in months, reference 6 Required storage capacity liquid manure in months, reference 6 Required storage capacity liquid manure in months, alternative 6 Price, electricity sold, EUR per kWh 0,025 Value of Green Certificates, (1,24 GC per MWh el: value 65 EUR/GC) EUR/kWh

0,08

Price, electricity purchased for process purposes, EUR per kWh 0,13 Price, heat sold, EUR per MWh 30 Treatment fee, organic waste, EUR per tonne 4,8 Capacity of trucks in use, tonnes 30 Average speed, transport vehicles local roads, km/h 40 Average speed, transport vehicles long distance transport, km/h 60 Average distance from storage to land, km 0,75 Average distance from farm to CAD, km 15,6 Average distance, long distance transport, km 50 Length of biogas pipeline, km 0

Economic consequences for farmers

The operation of the plant affects farmer`s economy in a number of ways. Costs for storage, and spreading of manure are estimated from the preconditions and assumptions mentioned in table 7.1 and compared to the reference situation without a biogas plant, where farmers are assumed to bear the costs of the distribution of surplus manure.

30

Table 7.2 shows the estimated effects. First of all manure storage costs are affected. The transmis-sion from partly solid systems to only liquid systems means a small cost increase. The supply of waste to the plant means larger amounts to be spread, which increases spreading costs a little. But the biogas plant is assumed to take care of storage costs of digested waste, and the long distance transport of surplus manure, which make farms save money in the CAD plant situation. In addition, cost savings appear in fertiliser purchase, due to improved fertiliser value, according to calculations in chapter 5.

Table 7.2 Estimated effects for farmers economy

Farmers cost savings, 1000 EUR per year

Manure storage -7 Manure spreading -11 Long distance transport surplus manure 22 Chemical fertiliser purchase 17 Total cost savings, 1000 EUR per year 21

As a result manure producing farmers face a little higher costs in manure storage and spreading, but this increase is outweighed by cost savings in transport of surplus manure and fertiliser purchase. Intotal cost savings of 21.000 EUR or approx. 525 EUR per farm on a yearly basis are calculated. In addition, crop producers who are assumed to receive surplus manure will benefit considerably from cost savings in fertiliser purchase.

Transportation costs

Liquid and solid manure is transported in trucks from the farms to the plant. Transportation costs are assumed to be covered by the company in the CAD situation. Table 7.3 shows calculated trans-portation costs. In this case trucks with a capacity of 30 tonnes are used locally. Trucks may be owned by the plant or hired by external suppliers. In fact it may be cheaper to own the trucks, but optimising the capacity is difficult but important. Transportation costs are calculated under the as-sumption that haulage is hired from external suppliers, and based on preconditions and assumptions as mentioned in Table 7.1.

Table 7.3 Transportation costs

Manure transportation 1000 EUR per year EUR per tonne

Liquid manure transportation to and from the CAD 112 2,1 Solid manure transportation to the CAD 19 2,7 Long distance transportation 78 3,5 Total 209

Transportation costs are calculated with an average distance of 15,6 km from farms to plant, and 50 km when long distance transported, and trucks of 30 tonnes capacity.

Investment costs

The CAD plant in the Belgian case study is a little smaller that the model plants on which the analy-ses are carried out. Thus some uncertainty in cost estimates must be expected.

31

Investment costs have been estimated as follows: 1000 EUR

Biogas plant 3900 CHP facility 500

Table 7.4 shows a break down table of investment costs in the co-digestion plant

Table 7.4 Investment cost break down table, 1000 EUR

Items Investment cost (1000 EUR) Site 107 Excavation 107 Fences 130 Driveway 61 Buildings 326 Pre-storage tank 45 Stirrer pre storage tank 30 Mixing tank 49 Stirrer mixing tank 30 Sanitation tank 30 Stirrer sanitation tank 17 Storage tank 49 Stirrer storage tank 32 Digester 278 Stirrers digesters 56 Heat exchangers 185 Biogas filter 76 Biogas storage 209 Biogas flare 92 Pipeline 151 Heat accumulation tank 30 Boiler 29 Odour filter 115 Pumps (biogas) 172 Biogas system 172 Automation 230 Pumps (biomass) 17 Help pumps 17 Construction 778 Waste pre storage 197 On farm investments 87

Total investment of the co-digestion plant 3905

Profitability of the biogas plant

Based on assumptions and preconditions the models calculate sales and costs of the CAD. Table 7.5 shows the break down of calculated sales and costs on a yearly basis in average 2005 prices.

32

Table 7.5 Sales and costs of the CAD in average 2005 prices, 1000 EUR

Electricity sales 600 Heat sales 87 Treatment fees 78 Sales in total 765

Electricity purchase for process -68 Maintenance -132 Sand removal -2 Insurance -16 Other costs -19 Staff costs -94 Premises -6 Administration -19 Capital costs -321 Costs in total -677

Net result of the plant 88

The calculations indicate that the CAD plant in the Belgian case would be economically feasible given the actual preconditions and biomass supplied. The question is if the net result is sufficient to cover transportation costs and storage costs for digested waste.

Economic performance of the CAD plant

The calculated net result of the biogas plant is compared to transportation costs and storage costs covered by the CAD in order to analyse if the system is profitable. These results are shown in table 7.6. Price level is Belgian 2005 prices.

Table 7.6 Average yearly profit of the CAD including transportation costs in 2005 prices

1000 EUR per year Transportation costs -209 Storage of digested waste -19 Net result of the biogas plant 88 Profit -140

Profit if biogas production was increased by 10 % -90 Profit if biogas production was decreased by 10 % -190

This means that the system is not quite economic even if the farmer’s cost savings were taken into account. However this can relatively easily be changed if additional organic waste of high quality was supplied to the plant so biogas production may increase. Figures indicate that a relatively small increase will make the system economic. Furthermore the treatment fee for the actual waste seems very low. Finally additional marketing of heat would improve plant economy

33

Calculations indicate that a CAD in the Belgian case would not quite be economically feasible given the actual preconditions and the specific biomass resources included. The biogas production seems to be insufficient to cover production and transport costs at the actual conditions for electric-ity and heat sales. However farmers gain considerable cost savings, and plant economy could rela-tively easy be improved by supplying additional organic waste of high quality, and also by increas-ing treatment fees.

Non technical barriers

In the Belgian situation, a number of barriers clearly hinder the development.

Walloon authorities seem reluctant to allow import of organic wastes from one region to another. This is in fact a severe disadvantage for CAD plants, as their economic performance is so far de-pendent on the supplies of organic waste. The waste should be of good quality and form no risc with respect to the final utilisation as a fertiliser on farmland.

A substantial amount of heat production from the plant can not be utilised as it is. If for example industrial use of heat is optional in the local area, it might be considered to establish a pipeline for biogas, a relatively inexpensive investment.

There seems also to be some uncertainty about the status of the digestate when it has been mixed with organic waste. If so it has to be certified before spreading, and application procedures are timeand money consuming, and certificates are only valid for 3 years. Also control procedures on input and output are reported heavy and costly.

All though the value of Green Certificates is quite attractive, the green certificate system seems notreally appropriate for CAD plants for several reasons. A number of issues can be mentioned

• Uncertainty if the GC market (quotas, price, number of certificates the plant can obtain). • No long term guarantee for the price of the GC: Price is guaranteed only for 15 years,

which make banks or financing institutes reluctant if long term profits are not guaranteed. • Calculation for GC attribution is very complicated. • Using by-products or other feedstock than animal effluents reduce the number of GC, as

energy is consumed for transport of manure and waste • Need to sell electricity and heat throughout all year. Heat demand must be continuous to

make GC profitable, and thus creates a need for constant and sufficient biogas production • Precise accounting of input and output is heavy, time and costs consuming (for CO2 bal-

ance) • Costs to control the plant conformity to obtain and validate GC are high.

It is also reported that cost level for feasibility studies, plant installations and operation are high. That may be so, but this may easily be balanced by increased income from energy production and treatment fees if the access to increased waste supplies were given.

Various authorities on local, regional and national level within the fields of agriculture, environ-ment, energy planning, waste management and veterinary control will be involved if a CAD plant project is initiated. Lack of knowledge of how to deal with a new technology is feared to lead to long considerations among authorities

34

Farmers may be reluctant to join a biogas plant due to lack of knowledge of the economic potential of the plant, and also about the potential cost savings they might gain.

A local sceptisism is mentioned. Further the location of this kind of facilities is restricted.

Recommendations

The access to increase supplies of organic waste should be widened by deregulating import restric-tions from other Belgian areas. Waste supplies of good quality are crucial to economic performance of the plants.

Restrictions on the use of digested manure should also be changed. The control should be carried out only on the input, because if only good waste from food processing companies and other un-problematic waste is used, there is no reasons to restrict the use of the digested manure

Lack of heat markets is a barrier for enlargement with biogas plants in Belgium. Thus programs to encourage initiation of district heating or industrial use of heat may support the development. Other options could be alternative applications of biogas use, natural gas grid injection or vehicle fuel, for example.

An adjustment of the Green Certificate system according to the mentioned special requirements of CAD plants would indeed support and ease the enlargement of plants in Belgium. CAD installations have a long depreciation time, which allows longer pay back times. Thus an extension of the guar-anteed price period is recommended.

Comprehensive information should be directed to authorities on different levels that are eventually involved in considerations about CAD plant projects.

Information seems also needed to farmers if they are not aware of the advantages they may gain from a co-digestion plant with respect to nitrogen management.

Local skepticism may be met by giving credible information about what the biogas plant can actu-ally do to prevent odours from the plants. And also that odours form manure spreading is reduced.

It appears that a number of barriers need to be addressed before an enlargement with CAD plants is likely to take place in Belgium. Based on Danish experience it is recommended to develop an action plan (initiated from government level) that first of all addresses the barriers mentioned above in a joint initiative. Secondly the development would be favoured by a demonstration programme, in which a number of CAD pant projects receive grants for feasibility studies, and then after a selec-tion of the most promising projects, investment grants for 3-5 plants. Finally, a follow-up pro-gramme to collect and disseminate experience and results to authorities, farmers and local inhabi-tants.

References

Nielsen, L.H., Hjort-Gregersen, K., Thygesen, P., Christensen, J., 2002. (Socio-economic analysis of centralised Biogas Plants – with technical and corporate economic analysis. In Danish.): Sam-fundsøkonomiske analyser af biogasfællesanlæg - med tekniske og selskabsøkonomiske baggrunds-

35

analyser. (Fødevareøkonomisk Institut, Frederiksberg, 2002) (Fødevareøkonomisk Institut, rapport nr. 136) 130 p.

36

8. Socio economic analysis

Introduction

The socio-economic analysis looks at the biogas-scheme from the point of view of the society at large. Therefore all consequences of the scheme in any sector of society should in theory be taken into account - including externalities. Externalities

Conventional economic analyses and corporate investment analyses of projects do not take the so-called externalities into account (Lesourne, 1975). Externalities, or external effects, imply neither expenses nor income for the corporate or private investor. However, a project may inflict burdens or contribute gains for the society relative to the reference activity, which must be taken into account when evaluating a project from the point of view of the society. A socio-economic analysis looks at the project or activity in question including externalities.

Biogas projects have implications not only for the agricultural sector, but also for the industrial and energy sectors. For the environment, mitigation of greenhouse gas (GHG) emissions and e.g. eutro-phication of ground water etc. are important external effects. In this study, efforts have been put into the quantification and monetisation of some of the biogas scheme externalities.

Objectives and analytical approach

The objective of the analysis is to estimate the socio-economic feasibility of best practice central-ised biogas technology in Belgium via the assessment of an imaginary centralised co-digestion pro-ject scheme. Furthermore, the objective has been to estimate consequences for the GHG emission and to estimate GHG emission reduction costs associated with using this biogas technology.

The analysis is carried out as a difference project analysis, in which an alternative activity is com-pared with its reference activity. The socio-economic evaluation of the alternative, the biogas scheme, relative to its reference or ‘business as usual’ involve quantification and monetising of im-pacts of the alternative for a number of reference activities, - in theory in all sectors affected by the biogas scheme.

The present socio-economic analysis is carried out at different levels, each new level taking into account still more of the external effects related to the biogas scheme. Four levels are included in the analysis, termed Result 0,1,2,3, where the base level do not include any externalities and the analysis at a higher level includes all effects of lower levels, as illustrated in Table 8.1.

The socio-economic levels of analysis are characterised by • Result 0: Energy production (e.g. biogas, heat and electricity) from biogas plants.

Externalities not included. • Result 1: Benefits for agriculture and industry are added to the analysis. • Result 2: Environmental externalities concerning GHG emission (CO2, CH4, N2O) is

added, if quantified. • Result 3: Income via Green Certificates, and monetised value of reduction in obnox-

ious smells are furthermore added.

Table 1 lists a number of aspects relevant for the extended socio-economic analysis. All such as-pects should in theory be quantified and monetised for the analysis.

37

Table 8.1 Socio-economic aspects included in the different levels of the analysis

Level of analysis: Result 0 Result 1 Result 2 Result 3

Aspects included:

Energy and resources:Value of energy production (biogas, electricity) R0 R0 R0 R0

Capacity savings related to the natural gas grid R0 R0 R0 R0

Security of energy supplies and political stability issues (R3)

Resource savings (energy and nutrients)

Global balance of trades

Increased road/infrastructure costs

..

Environment Value of GHG reduction (CO 2, CH 4 and N 2O) R2 R2

Other em issions (SO 2, NO x,..)

Savings related to organic waste treatm ent and recycling R1 R1 R1

Value of reduced N-eutrophication of ground water: R2* R2*

Value of reduced obnoxious sm ells R3

..

Agriculture

Storage, handling and distribution of liquid m anure: R1 R1 R1

Flexibility gains at farm s

Value of im proved m anurial value (NPK) R1 R1 R1

Veterinary aspects

..

Investments and O&M-costs:Investm ents. Biogas Plant R0 R0 R0 R0

O&M of Biogas Plant , incl. CHP unit for process heat R0 R0 R0 R0

Investm ents and O&M for liquid m anure transport R0 R0 R0 R0

..

Other aspectsEm ploym ent effects

W orking environm ent aspects, helth and com fort

..

* Data for the Danish case is used.

Only aspects in Table 8.1 that have been marked with a ‘R‘ are taken into account in the present case study for Belgium. All the remaining issues have not been quantified and monetised for the analysis due to lack of data relevant for the Belgian situation.

In Table 8.1 the mark ‘(R3)’ is assumed to relate to ‘Green Certificates’. Thus it has been assumed here that Green Certificates relate to benefits for the society concerning ‘Security of energy supplies and political stability issues’. If this is the case the methodology used is consistent. However, if other or further aspects already included with an ‘R’ in Table 8.1 are part of the reasoning or argu-mentation behind the Green Certificate system in question, inconsistency may arise. If part of the reasoning behind the Green Certificate system is covered by aspects, already taken into account in Table 8.1, the risk of double counting is obvious. E.g., if a value for achieved GHG reduction is reflected or covered via the market price on Green Certificates, then inconsistency and double counting arise when furthermore the value of GHG reduction explicitly is taken into account. Thus, including an estimated market price development on Green Certificates can be a delicate matter, and should be discussed. And, results must be interpreted accordingly. Important issues or aspects which have not been taken into account in any of the PROBIOGAS pro-ject country case-studies includes e.g.:

38

Veterinary aspects of introducing biogas plants in a region are not quantified and monetised for any of the socio-economic analyses carried out in the present project.

The list shown in Table 8.1 does of course not exhaust the list of consequences and externalities thatin principle ought to be taken into account when a project scheme should be evaluated from the point of view of society at large. Often the patterns of consequences ‘upstream and downstream’ of an activity are very difficult to access, and many issues therefore are often not taken thoroughly into account in conventional analyses. The present project faces the same difficulties, important issues have had to be omitted, and generally a number of ‘cut offs’ in the level of detail of the analysis have been done. However, in the present extended socio-economic analysis we have tried to sum up some of the above issues.

Fuel price forecasts

Fuel price development assumptions on coal, oil and natural gas covering the period 2005-2025, are based on the International Energy Agency’s (IEA) price assumptions from 2004, World Energy Outlook, October 2004. IEA’s prices are based on the assumption of a global annual economic growth of ca. 3.2 %. This implies an expected growth in the global energy consumption of ca. 1.7 % p.a., which means that the oil price is assumed to increase beyond year 2010. IEA expects that oil resources will be sufficient until 2030, and that oil prices will approach 32 USD/bbl in 2030 (in 2005-price level).

IEA underlines that the price assumption are uncertain, and that these primarily should be inter-preted as assumptions on the long term prices. Furthermore it is underlined that oil prices on short term can deviate considerable from the long term level.

The price assumption expressed in EURO are based on a dollar-EURO exchange rate of 1.25 which is close the present rate1. High crude oil prices seen presently, in spite of the relative low EURO-dollar exchange rate, means that the actual oil prices in EURO is considerably above what has been expected according to IEA.

In order to bring the IEA assumptions in accordance with the fuel price developments actually seen until 2005, the Danish Energy Authority (DEA) has assumed that the oil price will decrease from the present level linearly towards the IEA price level from 2006 to 2010. From 2010 and onwards the IEA oil price assumptions will be applied. Figure 8.1 shows the IEA and DEA assumptions on the crude oil price development. The DEA crude oil development forms the basis for DEA’s prices assumed on natural gas, diesel, heavy fuel oil and electricity.

The DEA price developments for socio-economic analyses will be used in the present project.

1 Danish Energy Authority, May 2005. (In Danish) Energistyrelsen, maj 2005. Rettet juni 2005. Appendiks: Forudsæt-ninger for samfundsøkonomiske analyser på energiområdet.

39

Figure 8.1 Crude oil price development assumed: DEA 2005.

As seen from Figure 8.1 only a moderate increase in the crude oil price has been assumed up to year 2030. It should be underlined, of course, that considerable uncertainty is associated with these long term assumptions.

The corresponding prices for the transport fuels, diesel and gasoline, are shown in Figure 8.2.

Transport fuel prices assumed for the socio-economic analysis.

Price level 2005. Source: DEA, June 2006.

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

2005 2010 2015 2020 2025

Year

Tra

nsp

ort

fu

el

pri

ce,

EU

R/G

J diesel an

consumer

gasoline an

consumer

Figure 8.2 Transport fuel price development assumed-

The price on natural gas is assumed to follow the same rate as assumed for the oil price. And, sale of biogas is assumed to get a price equal to the socio-economic natural gas purchase price at loca-tions of large consumers or plants using natural gas.

Figure 8.3 shows the socio-economic price developments assumed for natural gas. The sales price for biogas in the period 2006-2025 has been assumed to equal (in energy terms) the specific price development for natural gas, which in the figure is labeled ‘an plant’.

Oil (Brent)

0

20

40

60

80

2004 2009 2014 2019 2024 2029

2005-$/bl

IEA 2005

DEA 2005

40

Natural gas prices assumed for the socio-economic analysis.

Price level 2005. Source: DEA, June 2006.

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

2005 2010 2015 2020 2025

Year

Natu

ral

pri

ce ,

EU

R/G

J

an power plant

an plant

an consumer

Figure 8.3 Natural gas price developments assumed for the socio-economic analysis.

Electricity prices and CO2

In cases where the national partners have not been able to provide assumptions on the regional elec-tricity price development covering the period 2005-2025, assumptions made by the Danish Energy Authority (DEA) will be used as basis for the socio-economic analysis. DEA has published (June 2006) recommendations for socio-economic analyses, in which electricity price assumptions are included for an expected development in Nordpool electricity market price up to year 2030. These prices (in un-weighted annual average) are shown in Figure 8.4.

Socio-economic electricity prices. Price level 2005.

Source: Danish Energy Authority, June 2006.

Nordpool ex. CO2 price includes own assumptions.

0

10

20

30

40

50

60

70

80

90

2005 2010 2015 2020 2025

Year

Ele

ctr

icit

y p

ric

e E

UR

/MW

h

Nordpool

ab 10 kV-grid

ab 0,4 kV-grid

Nordpool ex. CO2

Figure 8.4 Socio-economic electricity price development assumed for the analysis.

41

Purchase and sale of electricity are assumed to have different pricing. The present analysis assumes that a biogas plant has to pay the socio-economic electricity price ab the 10kV-grid for purchased electricity. Electricity generated at the biogas plant, however, is sold to the market price, and in this analysis it has been assumed that the electricity market is the Nordpool spot market.

As seen from Figure 8.4 a considerable price difference has been assumed between purchase and sale of electricity. This is due to costs associated with using the grid for market access. It could be argued that electricity generated and sold from the biogas plant and supplied into the grid at the lower voltage level should benefit from being closer to the consumer, and thus does not use and does not constrain the transmission capacity of the high voltage part of the overall grid. And further, distributed generation might (to the contrary) contribute benefits to the grid e.g. by postponing the time for investments otherwise needed for upgrading the transmission grid capacity. However, such arguments need further analysis and detailed information on the regional electricity supply in ques-tion, and such analyses are beyond the scope of the present project.

CO2 and electricity

In 2004 the EU has implemented the emission trading directive which means that large parts of the energy sector, and a number of corporations in the EU with large energy consumptions, were issued CO2 emission quota for the period 2005-2007.

The issued quotas are tradable and may as such be traded among corporations, dealers etc. The aim of the quota system is to achieve CO2 emission reduction where this is most cost effective, and to have a system to regulate the overall emission. The period 2005-2007 is regarded as a test period in the EU before the actual Kyoto period, 2008-2012, in which period the emission reduction com-mitments of member states are binding.

The quota system means that a market and a price are being formed for CO2 emission reduction in the EU.

When a CO2 quota system is in force, the net overall CO2 emission (i.e. emission reduction achieved and increased emission) in the electricity system and in the sectors within the quota sys-tem will ad up exactly to the quota issued or set for the period for a region. CO2 emission allow-ances are tradable and actors within the EU will buy and sell emission allowances, and the overall amount of emission allowances in the market equals the set up overall commitments and constraints on the overall regional emission.

Biogas based electricity sold and delivered to the grid gets the market price for electricity, which includes the costs of the associated CO2 emission allowance for the marginal electricity producer in the market. Thus, a biogas plant within the EU can not sell its CO2 emission reduction as a separate product at the CO2 allowance market (e.g. at Nordpool). And thus, the quantification of a particular CO2 emission substitution (e.g. via biogas based electricity) in the power system becomes less rele-vant at the regulating or political level.

CO2 emission reductions achieved outside quota regulated emissions are however very relevant and are monetised via the market value of CO2 emission allowances.

Among the green house gasses only CO2 is presently handled by the quota system. Other important green house gasses (GHG) such as CH4 and N2O are not yet included in quota systems, and such

42

emissions, therefore, should be separately calculated as in conventional inventories. And for the extended socio-economic analysis such GHG reductions should be monetised in accordance with the prices assumed at the CO2 emission allowance market.

CO2eq emission estimates

Thus, quantification of CO2 emission consequences (in units of tonne CO2/year) of e.g. energy pro-jects within quota regulated sectors is in fact not needed for the socio-economic analysis. The fixed overall quota can be expected, under all circumstances, to be used/bought of some actor within the quota system, and reductions achieved by one actor will be utilised or emitted by another.

Seen from the overall socio-economic point of view the quantification of the physical CO2 emission of a quota regulated scheme is not relevant. However, seen from the point of view of the plant owner or investors, who must know the annual project costs for emission allowances needed to run the plant, the actual emissions in units of tonne CO2/year is very relevant. The same is the case, of course, for investors looking for CDM (Clean Development Mechanisms) projects outside the EU.

Therefore an estimation of the CO2 emission consequences of the biogas schemes are carried out as far as the available data makes this possible. Furthermore, to the extent possible from the data avail-able, the overall GHG emission consequence of the biogas scheme will be estimated.

In a Kyoto perspective all GHG emissions are relevant. And the CO2 emission only does not cover all consequences of a biogas project on the GHG emission scale. A detailed analysis (Nielsen et al. 2002) of biogas projects in Denmark showed that the direct CO2 emission reduction part was about 40% of the total GHG emission reduction achievable using the biogas solution compared to the business as usual activity. Important GHG emission reduction was related to reduced emission of methane CH4 (about 50%) and N2O (about 10%).

The electricity market price reduced from its CO2 price content

The overall CO2eq emission reduction costs will be estimated in the present analysis. To do this estimation the electricity sales price (and the income from electricity sale to the biogas project) must not contain indirect payments due to CO2.

Biogas based electricity sold and delivered to the grid gets the market price for electricity, which includes the costs of the associated CO2 emission allowance for the marginal electricity producer in the market.

Therefore the electricity prices assumed for this part of the analysis has been reduced according to the assumed CO2 price content or element included in the Nordpool price development assumed covering the period 2005-2025.

As basis for this correction the following assumptions have been made. The marginal electricity production is assumed to be CO2 neutral in 50% of the time. In the remaining 50% of the time a CO2-emission costs is assumed present in the marginal price at the Nordpool market. For this CO2-emission it is assumed that the marginal production plant is a coal based condensing plant with an overall electric efficiency of 45%. Furthermore, it has been assumed that the CO2 emission allow-ance market price throughout the period 2006-2025 is 20 EUR/tonne CO2 (or 150 DKK/tonne CO2). In 2005 fixed prices this assumption amounts to a CO2 related electricity price element of 7.67 EUR/MWh.

43

CO2eq emission reductions achieved are monetised via the assumed market value of the CO2 emis-sion allowances (20 EUR/tonne CO2).

Quantification of CO2eq reductions

Electricity generated from biogas substitutes electricity otherwise generated at (the marginal) power plants in the overall system. It is however, not a strait forward task to estimate the corresponding CO2 reduction achieved. This would, as already indicated, require a comprehensive analysis of the regional and overall electricity system.

To overcome this problem in the present analysis, it has been chosen, not to focus on the elec-

tricity generated from biogas and the CO2 emission substituted in the power system due to this

production, but rather to focus on the biogas generated.

It is assumed, therefore, that biogas produced (net) and used for electricity production substitute

natural gas (by energy content). The corresponding CO2 substitution or reduction is assigned to

the electricity production part of the biogas plant output.

Methane (CH4) emission consequences in agriculture are described in chapter 5. Furthermore, un-burned CH4 emitted via exhaust gasses from the motor/generator system generating electricity from biogas at the plant is included. Un-burned methane emitted is assumed to be 1% of the CH4 fuel.

The relevant gases, CO2, CH4 and N2O, differ with respect to their global warming potential (GWP); for a time horizon of 100 years, the Global Warming Potential (GWP) of CH4 is 21 times higher than that of CO2 (on a weight basis), whereas the GWP of N2O is 310 times higher than that of CO2 (Houghton et al., 2001). In the analysis, CH4 and N2O emissions are expressed as CO2

equivalents.

Purchase and sales prices of energy at location of the biogas plant

Electricity

Electricity purchase is assumed to be at the socio-economic cost that includes costs for transmission and distribution. Sales of electricity, however, are assumed to get the spot market price for electric-ity. Thus, there is an asymmetry due to distribution and transmission costs.

Green Certificates and green electricity

Electricity sales from the biogas plant are furthermore assumed to get a Green Certificate premium. Here, this premium is not regarded as a subsidy but as the added value that the society is willing to pay for ‘green electricity’, and the Green Certificate premium therefore should be included in the socio-economic calculation.

Green Certificate markets are however not present in all EU-member states, and the certificates are country specific and they are traded only within the member state having issued its particular Green Certificate system. For the present analysis, therefore, it has been chosen to carry out the calcula-tions for the two situations:

• with a Green Certificate market assumed in force (termed: Result 3), and • without a Green Certificate market assumed (termed: Result 2).

44

The price of Green Certificates is of course not the same in the different countries having a Green Certificate system today.

Assumption on the socio-economic value of Green Certificates for Belgium

In the case of Belgium the following has been reported: ‘Green Certificates will be guaranteed at a minimum price of 65 EUR/GC for a period of 15 years.’ (See chapter 2). In the Belgian case 1.24 GC (Green Certificates) is given for one MWh electricity based on biogas. This suggests that in the Belgian case an extra income premium of 65*1.24EUR is given for every MWh supplied to the national grid. If this is assumed, the income element via the Green Certificate is more than the double of the Nordpool electricity spot market price exclusive the CO2 value assumed (see Figure 8.4).

For the present analysis, therefore, a Green Certificate premium of 80EUR/MWh is assumed throughout the period 2006-2025.

Diesel and gasoline

Prices ‘an consumer’ as shown in figure 8.2 have been assumed.

Heat sales from the biogas plant

In the Belgian case a socio-economic sales price for heat of 8.3 EUR/GJ has been assumed throughout the period analysed.

General socio- economic assumptions

All prices in the socio-economic analysis are expressed as so-called factor-prices that do not includetaxes, subsidies etc. A socio-economic rate of calculation of 6% p.a. (real, inflation not included) is used, the base year is 2005 and the analysis covers the plant operation period 2006-2025.

Identical reinvestments are included when the technical lifetime of an investment reach below 2025. Termination values of investments or reinvestments with lifetimes going beyond the time horizon 2025 are determined via annuity calculation.

Prices are expressed in year 2005 factor prices (i.e. exclusive tax, subsidies etc.).

Sensitivity analyses

The analyses are carried out using socio-economic rates of calculation of 4.0% p.a., 6.0% p.a. and 10.0 % p.a. The central scenario or Base Case will assume a socio-economic rate of calculation of 6.0% p.a. (See Figure 8.5)

As mentioned above, the calculations are carried out with and without the assumption of an income element from Green Certificates. (See Table 8.1 and e.g. table 8.4)

Break-even biogas production costs and break-even GHG reduction costs are calculated based on different (Result 0 to Result 3) socio-economic assumptions. (See Table 8.5 and Table 8.6)

Results for Belgium

In the Belgian case a Centralised Anaerobic Digestion (CAD) plant or biogas plant of a treatment capacity of 205 tonnes biomass per day has been considered. The plant is assumed to treat about 75000 tonnes biomass annually.

45

CAD energy production

The CAD plant is combined with a CHP-plant that utilises all the biogas produced. Energy output from the facility is electricity and heat in amounts and with a calculated socio-economic value as shown in Table 8.2.

Table 8.2 Energy production and related socio-economic values

CAD-plant: Annual Energy production and its socio-economic value

Belgium, Wallon Region, Sprimont. Base Case

MWh/year mio.EUR/year

Net biogas-production sold 0 0.000

Net heat-production sold 2948 0.088

Net el-production sold 3097 0.105

Green Certificates on electricity sold 3097 0.250

The assumed sales price for biogas and electricity covering the period 2006-2025 are shown in Fig-ure 8.3 and Figure 8.4 respectively. The price of heat has been assumed constant (in fixed 2005-prices) at the socio-economic price of 30 EUR/MWh. Electricity sales are assumed to get the Nord-pool price minus the assumed CO2-price element (See Figure 8.4). The substituted CO2 related to electricity sales is taken into account explicitly as shown in Table 8.1. The direct income to the plant furthermore includes sale of Green Certificates, which as seen from Table 8.2 is by far the largest energy related income element in the socioeconomic analysis of the scheme.

GHG emission reduction

Table 8.3 gives an overview of the expected overall GHG balance for a 205 tonne per day capacity biogas plant based on Belgian conditions. As pointed out earlier the relevant GHG gases, CO2, CH4, and N2O, differ with respect to their global warming potential (GWP); for a time horizon of 100 years, the GWP of CH4 is 212 times higher than that of CO2 (on a weight basis), whereas the GWP of N2O is 310 times higher than that of CO2 (Houghton et al., 1996). In the GHG emission over-view, CH4 and N2O emissions are expressed in units of CO2 equivalents.

The main input for the estimation of effects of the biogas scheme on CH4 emissions come from the detailed calculations described in chapter 6.

2 According to reference: CLIMATE CHANGE 1995, The science of climate change; Contribution of the Working Group I to the Second Assessment Report of the Intergovernmental Panel on Climate Change; Houghton et al.; Cam-bridge University Press; ISBN 0 521 56436 0. Published 1996. The report has been approved by the COP, which is not the case for the later issue ‘CLIMATE CHANGE 2001’.

46

Focusing on the relative contributions to GHG emission reduction shown in the right-hand column of Table 8.3, it is seen that ‘Electricity-sales’ accounts for 46% of the (average) annual GHG reduc-tion calculated. The electricity generated based on biogas produced is assumed to substitute (fossil) NG that would otherwise emit about 1762 tonnes CO2 annually.

Table 8.3 CAD deployment and consequenses on GHG emission

Belgium, Wallon Region, Sprimont. Base Case

Concequence on annual GHG emission:

Equivalent CO2

Alternative - Reference %-split %-split

CO2:Gas-sales 0 ton CO2 0 0

EL-sales -1762 ton CO2 55 46

Heat-sales -920 ton CO2 29 24

NPK substitution -742 ton CO2eq 23 19

Transport fuel 201 ton CO2 -6 -5

CO2-equivalent.: -3223 ton CO2 100 84

Equivalent CO2

CH4: Alternative - Reference %-split %-split

Animal manure -10 ton CH4 189 6

Organic waste -6 ton CH4 106 3

CHP-plant unburnt 11 ton CH4 -195 -6

Total CH4 -5.5 ton CH4 100

CO2-equivalent.: -115 ton CO2 equivalent 3

Equivalent CO2

N2O: Alternative - Reference %-split %-split

Total N2O / Manure, Waste -1635 kg N2O 100

CO2-equivalent.: -507 ton CO2 equivalent 13

GHG in total

Reduction in CO2-equivalent: -3845 ton CO2 equivalent 100

Specific CO2-reduction: -0.051 ton CO2 equivalent / ton biomass

Comments to individual elements in table 8.3:

• CO2-emission reduction due to electricity sales is here calculated based on the assumption that biogas substitutes natural gas.

• Heat sales are assumed to substitute heat based on fuel oil from heat boiler with a thermal efficiency of 90%.

• For the CO2 reduction due to NPK substitution the following upstream specific energy and CO2 contents have been assumed: (38 MJ/kg pure N) 9.36 kg CO2/kg pure N, (17 MJ/kg pure P) 2.67 kg CO2/kg pure P, and (6 MJ/kg pure K) 0.80 kg CO2/kg pure K (Data from Refsgaard et al 1997). Data from Søren Kolind Hvid et al, 2004, have been used as basis for the CO2eq. emission calculation.

• Increased transport fuel (diesel) consumption in the biogas-alternative means an increased emission of CO2 of about 201 tonnes CO2 per year.

• Methane emission reductions are achieved at farms associated with the CAD plant. This re-duction amounts to about 10 tonnes CH4 per year.

47

• Methane emission consequences related to the treatment of industrial organic waste have been estimated to about 6 tonnes CH4 per year.

• Un-burnt CH4 in the exhaust gas from the CHP-motor system has been assumed to be 1% of the methane used in the motor. This means an increased CH4 emission of about 11 tonnes CH4 per year. This emission element is specific for the combustion technology applied, and technology capable of reducing or completely eliminate the emission of un-burnt CH4 exists.

• Consequences on the N2O emission are quantified based on general assumptions. It should be emphasized, however, that this estimation is very uncertain due to lack of detailed data for the actual situation. The general assumptions made in the present analysis are described in chapter 6.

Converting the GHG emission to units of CO2 equivalent emission, it is seen from the table that the annual GHG emission reduction due to the introduction of CAD in the Belgian case have been cal-culated to 3845 tonne CO2eq per year. Seen relative to the annual amount of biomass treated in the CAD-plant this GHG emission reduction is about 51 kg CO2eq per tonne of biomass supplied to the plant.

The present analysis indicates that CO2 reduction dominates in the GHG emission reductionsachieved. This may be surprising and may relate to the lack of data in the present study. Previous studies (Nielsen L.H. et al, 2002) have shown that GHG emission reductions achieved due to CAD utilisation in Danish cases are almost evenly distributed for the CO2 and CH4 reductions. N2O emis-sion reductions contribute about 10% of the overall CO2-eq reduction. The overall specific CO2-reduction seen in the Danish studies is about -0.090 tonnes CO2-equivalent per tonne of biomass supplied to the CAD plants analysed

In this Belgian case, methane emission reduction achieved related to the handling, digestion and storage of animal manure in the biogas alternative and related to the handling of organic waste amounts to about 16 tonnes CH4 per year. However, the assumption of 1% leakage of CH4 con-verted in the CHP-plant motor as un-burnt, and emitted to the environment via the exhaust, amounts to an increased emission of about 11 tonnes CH4 per year. Thus, the net result is a reduced emission of about 5.5 tonnes CH4 annually.

It should be emphasized, that important CO2eq contributions have not been quantified for the pre-sent analysis. Results, therefore, should be interpreted accordingly.

Annual costs and benefits

An overview of the annual costs and benefits entering the socio-economic calculation is given in Table 8.4. As described in section 0 the analysis has been carried out in 4 levels termed Result 0, Result 1, Result 2, and Result 3. Further income elements are added to the analysis when going from the Result 0 level to Result 3, as shown explicitly in the table. All quantified and monetised consequences available for the present analysis is included in the overall socio-economic result termed Result 3.

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Table 8.4 Annual socio-economic costs and benefits for the CAD alternative

Socio-economic results Biogas plant:

Annual costs and benefits Belgium, Wallon Region, Sprimont. Base Case

Costs (levellised annuity) Result 0 Result 1 Result 2 Result 3

mio.EUR/year

Invesments:

Biogas-plant 0.359 0.359 0.359 0.359

Transport 0.000 0.000 0.000 0.000

CHP-plant 0.044 0.044 0.044 0.044

Operation and maintenance:

Biogas production / biogas plant 0.278 0.278 0.278 0.278

Transport 0.027 0.027 0.027 0.027

Sum: 0.708 0.708 0.708 0.708

Benefits (levellised annuity) Result 0 Result 1 Result 2 Result 3

mio.EUR/year

Energy production:

Biogas sale 0.000 0.000 0.000 0.000

Electricity sale 0.105 0.105 0.105 0.105

Heat sale 0.088 0.088 0.088 0.088

Green Certificates 0.250

Agriculture:

Storage and handling of liquid manure -0.025 -0.025 -0.025

Value of improved manurial value (NPK) 0.087 0.087 0.087

Distribution of liquid manure -0.132 -0.132 -0.132

Transport savings at farms -0.006 -0.006 -0.006

Veterinary aspects 0.000

Industry:

Savings related to organic waste treatment 0.062 0.062 0.062

Environment:

Value of GHG reduction (CO2, CH4, N2O-reduction) 0.078 0.078

Value of reduced N-eutrophication of ground water: 0.061 0.061

Value of reduced obnoxious smells 0.026

Sum: 0.194 0.180 0.319 0.594

Result 0 Result 1 Result 2 Result 3

mio.EUR/year

Difference as annuity: Benefits - costs -0.514 -0.529 -0.390 -0.114

The annual costs (levelised annuity) for investments, reinvestments, and operation and maintenance of the CAD and CHP facility has been calculated using a socio-economic interest rate of 6.0% p.a.. This annual cost amounts to 708.000 EUR/year for the facility in question in the Belgian case as seen in Table 8.4.

The annual income elements for society or the benefits achieved are composed of benefits achieved in different sectors of society. In Table 8.4 these are grouped into net environmental benefits, bene-fits in industry, and in agricultural, and (net) energy production benefits. Furthermore, Green Cer-tificates are counted in as these represent valuated benefits to society. The value of Green Certifi-cates are in this context interpreted as a value society is willing to pay to achieve the external bene-fits associated with an environmentally benign green reliable domestic electricity production.

Comments to benefits listed in Table 8.4: • Energy: The basic assumption on energy prices are described in previous sections.

49

It should be noted that heat sales only concern about 1/3 of the heat production from the plant, and thus only about 1/3 of the potential income from heat sales has been included. This is due to a limited market for heat at the location assumed for the plant.

From Table 8.4 it is seen that a socio economic gain could have been achieved under Result 3 assumptions if all the heat produced could have been sold at the assumed socio-economic price of heat for Belgium of 30 EUR/MWhth.

• Agriculture: o Transport cost elements are both positive and negative as described in chapter 7. o A socio-economic value of the achieved reduction in obnoxious smells from fields

due to degassing manure in CAD-plants has been included. The monetisation is based on the cost difference (of 0.5 EUR/tonne liquid manure) between soil injection of liquid manure and direct application on soil. The argument for such monetisation is, that the degassed manure has reduced obnoxious smells equivalent to soil injected liquid manure in the reference situation.

o Data on veterinary aspects have not been available for the analysis. • Industry: A treatment fee of 4.8 EUR/tonne (3.7 EUR/tonne excl. 22% VAT) organic waste

supplied to the plant has been assumed. • A quantification and monetisation for reduction in N-leakage to ground water have been as-

sumed based on Danish general assumptions:

Reduced N leakage to ground water:

ESTIMATE based on the assumptions.

Reduced leakage is about 25% of saved chemical N fertilizer. (Ref.: Brian Jacobsen, SJFI).

Monetised value: 3.36EUR/kg N reduced leakage. (ref.: Ruth Grant, RG@dmu.dk)

Reduced leakage : 18.2 ton N per year

Monetised value of reduced N-leakage: 61141 EUR/year

It should be emphasized that considerable uncertainty is associated with these assumptions and these may not apply in the Belgian case. Data for the Belgian case have not been available for the present analysis.

When the sum of the monetised annual benefits exceeds the costs the proposed scheme is of course attractive for society based on the assumptions made. From table 8.4 it is seen from the negative net benefit Result 3 value, that the CAD scheme in question is not attractive for the society and that a socio-economic annual deficit of about 114000 EUR/year could be expected. This, assuming that income from Green Certificates represents consistent socio-economic benefits (and not a subsidy).

If GC’s (and the assumed value of reduced obnoxious smells) are not counted in, however, the socio-economy of the CAD scheme is expressed as the Result 2 value. Result 2 shows an annual deficit of about 390000 EUR/year. Thus, from the data available and from the basic socio-economic assumptions made, the project is not attractive for society.

Again, it should be emphasized, that a number of important issues for the socio-economic evalua-tion of the scheme have not been quantified for the present analysis (see Table 8.1).

Socio-economic electricity production costs

The socio-economic results expressed via the key-number, electricity production cost (for project break-even), are shown in Table 8.5.

50

To achieve socio-economic break-even for the CAD-scheme the price for electricity generated at the facility and fed into the local electricity grid should be as shown in Table 8.5.

Table 8.5 Electricity production costs. Or, Break-Even electricity price for the CAD-scheme Socio-economic results

Belgium, Wallon Region, Sprimont. Base Case

Electricity production cost :

Result 0 : 0.200 EUR/kWh

Result 1 : 0.205 EUR/kWh

Result 2 : 0.160 EUR/kWh

Result 3 : 0.071 EUR/kWh

From the table it is seen that based on Result 2 assumptions the achieved socio-economic sales price should amount to 0.160 EUR/kWh to achieve break-even. Taking into account the assumed income from Green Certificates in the Belgian case and the assumed value of reduced obnoxious smells, looking at the Result 3, a socio-economic break-even is attained at an electricity sales price of about 0.071 EUR/kWh.

GHG emission reduction costs

The socio-economic results can likewise be expressed via the key-number, GHG-reduction cost achieved via the CAD-scheme (for project break-even). For this analysis, of course, income ele-ments from the GHG reduction achieved must not enter the calculation. On this basis the key num-ber can be calculated as shown in Table 8.6.

Based on Result 2 assumptions the CO2 reduction cost achieved via the project is about 122 EUR/tonne CO2eq reduced. However, based on Result 3 assumptions, the reduction cost is about 50 EUR/tonne CO2eq reduced.

Table 8.6 Break-even GHG reduction costs Socio-economic results

Belgium, Wallon Region, Sprimont. Base Case

Green House Gas reduction costs :

Result 0 : 134 EUR/ton CO2

Result 1 : 137 EUR/ton CO2

Result 2 : 122 EUR/ton CO2

Result 3 : 50 EUR/ton CO2

The above calculations are based on a socio-economic rate of interest of 6.0% p.a. (real, inflation not included). The sensitivity of the GHG-reduction cost calculated when changing the socio-economic interest rate is illustrated in Figure 8.5. In Figure 8.5 the GHG emission reduction cost has been calculated assuming an interest rate of 4%, 6% and 10% p.a. respectively. It is seen that results of the socio-economic analysis are very sensi-tive to the interest rate assumed.

51

GHG emission reduction costs. Euro/ton CO2

-60

-40

-20

0

20

40

60

80

100

120

140

160

180

Result 0 Result 1 Result 2 Result 3Eu

ro /

eq

. to

n C

O2

Interest rate4 % p.a.

Interest rate6 % p.a.

Interest rate10 % p.a.

Figure 8.5 Socio-economic GHG emission reduction costs. Belgium.

Going from the 4% p.a. case to the 10% p.a. case the GHG reduction costs calculated based on Re-sult 3 assumptions change from a negative value of about 34 EUR/tonne CO2eq to about 84 EUR/tonne CO2eq reduced.

Socio-economic conclusions

The main conclusions of the socio-economic analysis of the proposed CAD-plant project for Bel-gium are:

• Based on Result 0 assumptions the plant considered is not attractive. Thus, the socio-economic value of energy production alone can not justify the deployment of the proposed biogas plant project.

• Based on Result 1 assumptions, where net agricultural benefits and benefits for industry concerning treatment of organic waste are included in the analysis, this proposed project is still not favorable for society at large.

• Based on Result 2 assumptions, where the calculated environmental implications (net bene-fits) on Green House Gas emissions (CO2, CH4, and N20) and N-eutrophication of ground water furthermore are taken into account, the annual socio-economic deficit is calculated as 390000 EUR/year.

• Including furthermore the estimated externalities related to reduction of obnoxious smells and income from the Belgian Green Certificate scheme (Results 3), the utilization of the proposed biogas plant in the configuration considered is still not attractive seen from a socio-economic point of view.

It should be noted, that based on Result 3 a socio economic gain could have been reached if all of the heat produced at the plant had been sold (at the assumed average heat price of 30 EUR/MWhth

covering the period 2006-2025). (Likewise one may note, that a doubling of the assumed electricity

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spot marked price (of in average 34 EUR/MWhel exclusive CO2 payment and exclusive cost of transmission and distribution) would imply about break-even at Result 3 level.)

As indicated in Table 8.1 a number of externalities relevant for the socio-economic analysis have not been included due to lack of data. These aspects can be expected to contribute effects in favor ofthe biogas alternative with the exception of some potential negative veterinary effects which may involve socio-economic costs.

References

Lesourne, J., 1975. Cost-benefit analysis and economic theory. North-Holland.

Houghton, J.T. et al. (ed.), 1996. ‘CLIMATE CHANGE 1995, The science of climate change’; Contribution of the Working Group I to the Second Assessment Report of the Intergovernmental Panel on Climate Change; Cambridge University Press; ISBN 0 521 56436 0. Published 1996.

Danish Energy Agency, 2006. (in Danish) Forudsætninger for samfundsøkonomiske analyser på energiområdet. Available at: http://www.ens.dk/graphics/Publikationer/Energipolitik/opd_braendselsprisforuds.pdf

Nielsen, L.H., Hjort-Gregersen, K., Thygesen, P., Christensen, J., 2002. (Socio-economic analysis of centralised Biogas Plants – with technical and corporate economic analysis. In Danish.): Sam-fundsøkonomiske analyser af biogasfællesanlæg - med tekniske og selskabsøkonomiske baggrunds-analyser. (Fødevareøkonomisk Institut, Frederiksberg, 2002) (Fødevareøkonomisk Institut, rapport nr. 136) 130 p.

Sommer, S.G., Petersen, S.O., Møller, H.B., 2002. A new model for calculating the reduction in greenhouse gas emissions through anaerobic co-digestion of manure and organic waste. In: Peter-sen, S.O., Olesen, J.E. (Eds.) Greenhouse Gas Inventories for Agriculture in the Nordic Countries. DIAS Report No. 81, Danish Institute of Agricultural Sciences, pp. 54-63.

Sommer, S.G., Petersen, S.O., Møller, H.B., 2004. Algorithms for calculating methane and nitrous oxide emissions from manure management. Nutrient Cycling in Agroecosystems 69: 143–154, 2004. Kluwer Academic Publishers.

Refsgaard, K, Halberg, N, Kristensen, E. S,1997. Energy Utilization in Crop and Dairy Production in Organic and Conventional Livestock Production Systems.

Søren Kolind Hvid, Bo Weidema, Ib Sillebak Kristensen, Randi Dalgaard, Anders Højlund Nielsen. (In Danish) Miljøvurdering af landbrugsprodukter. Miljøstyrelsen. Miljøprojekt Nr. 954, 2004.

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9. Conclusions

Calculations show that farmers by the participation in the CAD plant would benefit from cost sav-ings in transport of manure and in fertilizer purchase. However the system as a whole would not quite be economic, as energy sales at the scheduled waste supply can not cover costs. As some of the organic waste that is included in the calculations has a relatively low energy production poten-tial this could easily be altered by supplying more waste, and waste of better quality. Another way to improve economic performance is to find a larger market for heat production.

The case study turns out also to be not socio-economically viable at the actual level of waste supply,even when the value of green certificates is taken into account. Nevertheless the technology seems to be an attractive tool for Green House Gas reduction with an estimated reduction cost at 50 EUR/tonne CO2 reduced.

Before an enlargement with CAD plants in Belgium is likely to take place a number of non techni-cal barriers have to be addressed (see chapter 7). Based on Danish experience it is recommended that a specific CAD action plan is developed and implemented. It should contain following aspects:

Restrictions on waste application (import from other Belgian areas) should be eased. Waste supplies are crucial for both corporate and socio- economic performance of CAD plants. Furthermore restric-tions on the end use of digested manure and waste should be eased. Based on Danish experience control is smoothly carried out on the manure and waste input. If only unproblematic wastes are supplied, there is no need for restrictions on the final utilization.

Economic performance would improve if additional heat was marketed and sold. Thus initiatives to find industrial or private customers for heat production should be encouraged.

Information strategies towards authorities, farmers and local population, who are eventually af-fected if a CAD project is initiated, should be developed.

The Green Certificate System should be adjusted in order to meet the special needs of CAD plants

A demonstration programme from which investment grants can be received for a number of plants should be implemented, accompanied by a follow-up programme to collect and disseminate the experience which is made.

Appendix: Calculation sheet mass balances and methane production.

Belgium Amount DM DM VS CH4 yield Total N

NH4-N P K

tonne year-1

g/kg kg year-1

% of DM nm3 CH4 kgVS

-1nm

3 CH4 year

-1g/l g/l g/l g/l

Agricultural biomass

Dairy cattle slurry 43236 71 3069756 80 0,2 491161 2,2 1 1,8 4,5

deep litter 2793 278 776454 80 0,15 93174 5,8 0,5 4,5 10

Beef cattle deep litter 1858 278 516524 80 0,15 61983 5,8 0,5 4,5 10

Horses solid manure 180 300 54000 80 0,2 8640 3 0,3 1 7

Fattening pigs slurry 8056 102 821712 80 0,3 197211 3,87 2,5 3,16 6,22

Laying hens/broilers

deep litter 2268 550 1247400 80 0,35 349272 22,89 10 16,35 17,98

Energy crops 3000 300 900000 80 0,35 252000 15 0 1 1

Organic waste

waste waters from milk indus-try 800 60 48000 80 0,2 7680 3 0 6 1

waste waters from cheese industry 0 1 0 80 0,2 0

lactoserum from cheese industry 8000 50 400000 80 0,2 64000 1 0 0 0

fruit pulp 1200 300 360000 80 0,35 100800 3,36 0 0,127 1

fruit pits 150 850 127500 80 0,4 40800 1 0,5 1 1

fruit pulp (apple & pear) 20 300 6000 80 0,4 1920 3,36 0 0,127 1

serum from dairy product industry 0 0,2 0 80 0,4 0 1 0 1 1

waste waters from milk indus-try 5430 70 380100 80 0,3 91224 5 1 2 2

stuff from stra-chy products 800 70 56000 80 0,4 17920 1 1 1 1