Removing Risk from the Biomass Supply Chain: Growing a Sustainable Pathway Biofuels Law and...
Transcript of Removing Risk from the Biomass Supply Chain: Growing a Sustainable Pathway Biofuels Law and...
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Removing Risk from the Biomass Supply Chain: Growing a Sustainable Pathway
Biofuels Law and Regulation Conference
Sam JacksonMay 2, 2014
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2Copyright 2014, Genera Energy Inc.
Company Overview
• Privately held biomass supply solutionscompany based in Vonore, TN
• Bringing an industrial approach and experience to agricultural biomass supply
- Energy crop production, biomassprocessing, project management
• The most experienced company in the countryproducing, handling, and processing a widevariety of biomass feedstocks
- Purpose grown crops, residues
• Proprietary biomass feedstock processing
• Extensive partners up & down the value chain
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167 Tellico Port RoadVonore, TN 37885(423) 884-4111 – tel.www.generaenergy.com
Dr. Sam Jackson accepting the 2013 Sustainable Biofuels Award for Sustainable Feedstock Innovation,Awarded at the World Biofuels Markets 2013 Congress & Exhibition, the largest international gathering of its kind.
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4Copyright 2014, Genera Energy Inc.
Land Owners & Farmers
Long-term land leases & easements
Biomass crop services: establish, manage, harvest,
collect, store, transport
Long-term biomass feedstock supply contract
On-time, sustainable delivery of high quality
biomass feedstock
Biomass Consumers
(primarily technology &
project developers)
EnergyCrops
BiomassFeedstocks
What We Do
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Copyright 2014, Genera Energy Inc.
Land Accumulation& Control Model
Optimized Planting & Establishment Success
Multi-system Cost Analysis& Harvest Scheduling
Maintain Quality & Minimize Cost
Risk Management& QA/QC
Data-Rich Feedstock Supply & Cost Model
Preferred InputSupplier Network
Full Cycle Production & Maintenance
Moisture Management & Optimized Location
Project-SpecificSystem Design
Genera’s Integrated Solution DeliversEnergy Grange™ Management Supply ASSURE™ System BIN-SPEC™ ProcessingProprietary
GIS Model
Planning Energy Crop Establishment & Production Harvesting, Logistics & Inventory Milling & Material Handling
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Copyright 2014, Genera Energy Inc.
• Land recruitment– Real-world, grounded
information is key– Integrated, long-term land
control
• Achieving projected crop yields– Weather impacts– Management consistency
• Inventory risk– Storage degradation– Fire, other catastrophic events
• Things beyond our control– Commodity price swings– Oil costs– Policy changes
Managing Risk
Crops InventoryThe Unknown
Land
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7Copyright 2014, Genera Energy Inc.
• Land is key in biomass production
• Landowners will require:– Economic benefit– Long-term consistency in
income through bankable contracts
– Low cost or assisted cost establishment
– Risk management tools– Technical assistance
Land Availability and Recruitment
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Copyright 2014, Genera Energy Inc.
• Grower contracts should:– Be backed by a bankable entity– Provide adequate economic
return w/adjustments– Be of long duration (10 yrs or
longer)– Share risk among partners– Provide sources of technical
assistance
• Annual crops provide flexibility
• Contracts will take different forms, from full supply services to simple land leases
• Risk elements must be addressed in contracts:– Land ownership changes
• Sales• Death• Bankruptcy
– Production requirements• Volume• Quality
– Compositional– Moisture
Land Availability and Recruitment
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Copyright 2014, Genera Energy Inc.
• Supplying biomass year round, with consistent quality is key
• Feedstock production risk includes– Yield
• Environmental impacts• Management impacts• Disease/Pests
– Quality• Variability• Foreign materials
Crop Production Risk
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Copyright 2014, Genera Energy Inc.
• Long-term storage introduces risk– Quality loss/change over time
• Chemistry• Dry matter loss• BTU loss
– Catastrophic loss• Fire• Weather
• Efficient industrial supply chain management required– Chain of custody– Proper handling and storage
Inventory Risk
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Copyright 2014, Genera Energy Inc.
• Commodity price swings– Can significantly change
availability of land (pricing)– Changes competitiveness of
biomass crops– Defines the importance of
long-term contracts to protect investment in perennial crops
• Oil costs– Price at the pump matters to
the majority of the voting public
– Biofuels must be competitive and understood by the public
The Unknown
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Copyright 2014, Genera Energy Inc.
• Government Policies– Inconsistency and variability
deters innovation and investment
– RFS• Annual evaluations on policy ,
whether positive or negative, do not help advance an industry
• The RFS will drive investment at a low cost to the Federal Government if maintained for an extended period
The Unknown
• Government Policies– EPA Approved Pathway
Process• Must be streamlined and
made more transparent• Biomass sorghum in pipeline
for over two years!
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Copyright 2014, Genera Energy Inc.
• Land Recruitment– BCAP and similar programs
• Overcome high upfront costs for producers
• Must be implemented effectively
– Alternative biomass markets– State-based
incentives/programs
• Government Policies– Consistency!– Loan guarantee programs
tailored to feedstock supply chains
– State-based incentives programs
Mitigating Risks
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Copyright 2014, Genera Energy Inc.
• Crop Production– Crop insurance
• Expand traditional yield-based risk management programs
– Continued varietal improvement• Establishment• Disease and pest resistance• Herbicide tolerance• Productivity• Conversion efficiency
Mitigating Risks
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Copyright 2014, Genera Energy Inc.
• Feedstock Portfolio– Multiple feedstocks to feed
one facility– Provides land recruitment
flexibility (annual vs. perennials
– Increases ability to do year-round delivery• Reduces risk and cost
associated with storage
– Provides a buffer for climatic and disease/pest impacts
• Integrated Management– Systems matter
• Biomass supply is more than a collection of individual unit operations
• Integration of entire systems is critical
– Consistency• Efficient and reliable supply of
a consistent quality biomass requires the high degree of coordination
– Continuous Innovation• Continuous improvement
reduces cost significantly
Addressing Risk Across the Supply Chain
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Copyright 2014, Genera Energy Inc.
2. Generate more consistent quality, improving yields and lowering operating costs
Genera’s Integration Improves Economics
Cost Per Ton
$55
1. Lower feedstock cost by as much as 33%
Reduce overall cost volatility, enhancing “financability” of downstream project
$85
Quality
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17Copyright 2014, Genera Energy Inc.
Summary
• Feedstock risks are real and must be addressed
• Knowledgeable Planning eliminates many risks
• Genera provides de-risked, scalable feedstock supply and processing solutions– Specialized in providing
consistent, uniform industrial biomass feedstocks
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Genera Energy Inc.167 Tellico Port RoadVonore, TN 37885
423.884.4110 – Phone 423.884.4129 – Fax
www.generaenergy.com
Sam Jacksonsjackson@generaenergy,com